Dave Ramsey Urges 62-Year-Old With $1.5 Million to Spend More as 4% Rule Draws Scrutiny
Updated
Updated · 24/7 Wall St. · Jul 2
Dave Ramsey Urges 62-Year-Old With $1.5 Million to Spend More as 4% Rule Draws Scrutiny
2 articles · Updated · 24/7 Wall St. · Jul 2
Summary
A 62-year-old divorcee with $1.5 million in retirement savings, no debt and just $2,000 in monthly spending was told by Dave Ramsey she is "scared to live" despite already being financially secure.
Ramsey attacked the 4% withdrawal rule as overly conservative and argued she could draw 6% to 8%—up to $120,000 a year on an 8% rate—if her portfolio keeps earning strong returns.
That advice hinges on Ramsey's 12% annual return assumption, which the report says masks market drawdowns; at 5% returns and 8% withdrawals, the portfolio would shrink instead of compounding.
The 4% rule was designed to survive bad retirement timing such as the 1973-74 bear market or the 2000-02 tech crash, when sequence-of-returns risk can permanently damage a portfolio.
For this caller, even a 4% withdrawal would generate about $60,000 a year—well above her spending—so the practical takeaway is to separate essential from discretionary costs and adjust withdrawals as markets change.