Dave Ramsey’s Terrible Retirement Advice with Paula Pant and Joe Saul-Sehy

Nov 20, 2023

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In this episode, we're talking about Dave Ramsey's terrible retirement advice. Let me put myself in your shoes. No matter how old you are, you’re probably saving for retirement. You’re trying to figure out how much you need to save and what retirement accounts are best - do you go 401K or Roth IRA, etc? And the biggest question is, how much money can you take out each year for retirement? And, you’re hoping, fingers crossed, you’re saving enough. Then, the biggest voice in money, Dave Ramsey, comes along and says it’s simple, if you earn 12% each year in your investments, you can safely take out 8% for retirement each year and leave 4% in your account for inflation. Simple, according to his “math.” But it’s not that simple, and it’s mathematically wrong advice - damaging advice if you ask me. Why? Because of pure facts, the stock market's average 30-year return is 9.9% and just 7.3% adjusted for inflation - far less than the 12% return he spouts. His latest rant in response to a caller who wanted to know how much he could take out for retirement each year is the reason for this episode. I called in my two money expert friends, Paula Pant from Afford Anything and Joe Saul-Sehy from Stacking Benjamins, to talk through why this advice is wrong, what moral obligation money experts have to their listeners to get things right, and what you need to know to figure out how much money you should be saving and what a good retirement withdrawal rate really is.

Links

Afford Anything https://affordanything.com/

Stacking Benjamins https://www.stackingbenjamins.com/

Average Stock Market Return article

Supernerds United Against Dave Ramsey's 8% Safe Withdraw Rate Guidance article