I retired at age 53, so I am in my early 60s. Many of them resisted me because they couldn't understand the idea of not working if it wasn't necessary. I considered the phases of my life. I worked very hard to achieve what I have now, but in my last years, I owe it to myself to "stop and smell the roses." In my instance, I departed the nation after retiring and currently reside in Latin America. It made it possible for me to appreciate my new surroundings while escaping all the bad things that were going on in America. Nobody that I know of regrets retiring has yet to come to me.
Excellent video. 8% is ridiculous and dangerous. Ramsey is an entertainer, not a financial expert. He should stick w/reducing debt. That's where his expertise begins and ends.
Dave is good at a method of getting out of debt. If you follow it it’s most likely going to work. His retirement advice is not as good, in my opinion. It will out likely work if you have enough to be able to handle a downturn in the market, as you noted.
Nick you are so right! No one knows what the future holds. However, we can analyze the past. Those that retired in 1999 and were 100% stock and spent 8% .... well, after the lost decade, they did not have much left. Does Dave tell you not to buy auto/home/health insurance? Because financially planning for a worst-case scenario is insurance!
I recently retired and am at 75% stocks. So far all is good but I am not taking about 6 percent for the next few years and then social security will kick in and I will be down to 3%.
I agree with what you say. I think somewhere Dave makes the point that, if you make a goal too unobtainable, it will discourage people from even starting towards that goal. That's why we encourage people to take three 20-minute walks per week, instead of a 2-mile run each day, even though the 2-mile run might be more in line with being fit. Everyone would agree that it is better to retire with no debts and a nest egg than with debts and no nest egg, and that is probably more impactful (for better or worse) than the withdrawal rate. Just IMHO!
It seems like a lot of Ramsey's advice is overly conservative (ALL debt is bad, ONLY buy a house on a 15-year mortgage, you MUST pay off your mortgage before you retire), but this advice flies in the face of his other overly conservative advice.
How about, if at the start of every year you can live comfortably off 4% you can afford to spend 8% in that year? That is if the market tanks you can drop back to the 4% without too much pain.
You can always take out X% of your portfolio every year for any X! As long as you have no fixed floor of expenses, your original $2 million might drop to $200k and so your "10% rule" might drop from $200k a year to $20k a year. Of course, everyone has some fixed floor of expenses, that's the biggest problem with Ramsey. There's also the duration question. If you model that YOLO "X% of the current portfolio every year" plan, for a 25 year span (i.e., the normal 65 year old retirement, living to ~90), your statistical max life spend *is* by taking around 9%. If you're modeling a 45-year span (45-year old FIRE person hoping to live to 90), you actually maximize lifetime spending by a 3.9-4% rate, because you leave more powder dry to grow in the market and the growth means that 4% (later) will be worth more than 9% of the reduced portfolio.
There is a minimum distribution requirement enforced, which increases with age. How do we stick to the 4% rule? I plan to retire in a year when I am 79. I work this long since I enjoy my work and can do as well (if not better than) as all other younger colleagues. I am very grateful! I understand most people retire at much younger age for various reasons. But what would be your advice to someone like me who retires at almost 80 years old and who just bought a new-built ranch home and a new Toyota 4 runner. Appreciated for any advice you provide.
Dave Ramsey should stay in his lane: his famous Baby Steps. He has developed a good method to help people get out of debt. Full stop. He does not have credentials; he went to the school of hard knocks. Fortunately for him, he took it seriously and developed a plan that worked to get him out of debt, and he was young enough that he had time to recover. I’m reminded of an interview with Warren Buffet around 2007-08. The primary topic was the stock market, of course. In closing, the interviewer asked Buffet about the craziness going on the real estate and housing market at that time. Mr. Buffet wisely deferred. He said it seemed unusual. He said he *didn’t know* because his area of expertise was equities, not real estate. Stay in your lane, Mr. Ramsey.
Not saying I'm not a goober but me and my calculator dwell on the main level of my own home and I know that Dave isn't the financial guru he thinks he is. Still helps a lot of people with basic budgeting but man he has several things wrong.
me, i have no confidence in the market . i do 401k HSA and IRA .... but i can't do the dive into S&P 500 with the rest of my money. i have money in a 4% interest account .. but i know that is not enough. i like the math nerds over the Ramseys. unfortunately the market i not invested by the math nerds, but instead by volatile cash chukers. it seems so hard to predict the market. once my money is in the market i worry less. but i find it hard to fork over the money in the first place. i consider all money i put in the market as lost. when it is auto out my check, its easy to forget about it.
I retired at age 53, so I am in my early 60s. Many of them resisted me because they couldn't understand the idea of not working if it wasn't necessary. I considered the phases of my life. I worked very hard to achieve what I have now, but in my last years, I owe it to myself to "stop and smell the roses." In my instance, I departed the nation after retiring and currently reside in Latin America. It made it possible for me to appreciate my new surroundings while escaping all the bad things that were going on in America. Nobody that I know of regrets retiring has yet to come to me.
Excellent video. 8% is ridiculous and dangerous. Ramsey is an entertainer, not a financial expert. He should stick w/reducing debt. That's where his expertise begins and ends.
Dave is good at a method of getting out of debt. If you follow it it’s most likely going to work. His retirement advice is not as good, in my opinion. It will out likely work if you have enough to be able to handle a downturn in the market, as you noted.
OUTSTANDING, well-explained analysis and discussion.
Dave R. Is good for people that are bad with money. People that are good with money realize that he is a kook.
Very enlightening and informative video. Thanks
Nick you are so right! No one knows what the future holds. However, we can analyze the past. Those that retired in 1999 and were 100% stock and spent 8% .... well, after the lost decade, they did not have much left. Does Dave tell you not to buy auto/home/health insurance? Because financially planning for a worst-case scenario is insurance!
So true , good point .
I recently retired and am at 75% stocks. So far all is good but I am not taking about 6 percent for the next few years and then social security will kick in and I will be down to 3%.
I agree with what you say. I think somewhere Dave makes the point that, if you make a goal too unobtainable, it will discourage people from even starting towards that goal. That's why we encourage people to take three 20-minute walks per week, instead of a 2-mile run each day, even though the 2-mile run might be more in line with being fit. Everyone would agree that it is better to retire with no debts and a nest egg than with debts and no nest egg, and that is probably more impactful (for better or worse) than the withdrawal rate. Just IMHO!
Has Ramsey ever corrected himself on this? (I think I know the answer.)
It seems like a lot of Ramsey's advice is overly conservative (ALL debt is bad, ONLY buy a house on a 15-year mortgage, you MUST pay off your mortgage before you retire), but this advice flies in the face of his other overly conservative advice.
How about, if at the start of every year you can live comfortably off 4% you can afford to spend 8% in that year? That is if the market tanks you can drop back to the 4% without too much pain.
Smile, bucket, guard rail, methods
You can always take out X% of your portfolio every year for any X! As long as you have no fixed floor of expenses, your original $2 million might drop to $200k and so your "10% rule" might drop from $200k a year to $20k a year. Of course, everyone has some fixed floor of expenses, that's the biggest problem with Ramsey.
There's also the duration question. If you model that YOLO "X% of the current portfolio every year" plan, for a 25 year span (i.e., the normal 65 year old retirement, living to ~90), your statistical max life spend *is* by taking around 9%. If you're modeling a 45-year span (45-year old FIRE person hoping to live to 90), you actually maximize lifetime spending by a 3.9-4% rate, because you leave more powder dry to grow in the market and the growth means that 4% (later) will be worth more than 9% of the reduced portfolio.
Great video! 8% withdrawal rate and 100% in the stock market is just gambling. Might as well buy lottery tickets.
There is a minimum distribution requirement enforced, which increases with age. How do we stick to the 4% rule? I plan to retire in a year when I am 79. I work this long since I enjoy my work and can do as well (if not better than) as all other younger colleagues. I am very grateful! I understand most people retire at much younger age for various reasons. But what would be your advice to someone like me who retires at almost 80 years old and who just bought a new-built ranch home and a new Toyota 4 runner. Appreciated for any advice you provide.
Dave Ramsey should stay in his lane: his famous Baby Steps.
He has developed a good method to help people get out of debt. Full stop.
He does not have credentials; he went to the school of hard knocks. Fortunately for him, he took it seriously and developed a plan that worked to get him out of debt, and he was young enough that he had time to recover.
I’m reminded of an interview with Warren Buffet around 2007-08. The primary topic was the stock market, of course. In closing, the interviewer asked Buffet about the craziness going on the real estate and housing market at that time.
Mr. Buffet wisely deferred. He said it seemed unusual. He said he *didn’t know* because his area of expertise was equities, not real estate.
Stay in your lane, Mr. Ramsey.
Not saying I'm not a goober but me and my calculator dwell on the main level of my own home and I know that Dave isn't the financial guru he thinks he is. Still helps a lot of people with basic budgeting but man he has several things wrong.
Well stated
me, i have no confidence in the market .
i do 401k HSA and IRA .... but i can't do the dive into S&P 500 with the rest of my money. i have money in a 4% interest account .. but i know that is not enough.
i like the math nerds over the Ramseys.
unfortunately the market i not invested by the math nerds, but instead by volatile cash chukers. it seems so hard to predict the market.
once my money is in the market i worry less. but i find it hard to fork over the money in the first place.
i consider all money i put in the market as lost. when it is auto out my check, its easy to forget about it.