Financial expert Dave Ramsey has long advocated that $1 million is enough to retire comfortably — provided it's invested properly. On his show, Ramsey and his co-host Jade Warshaw discussed how a $1.4 million retirement portfolio could generate lasting income through a 10% average rate of return.
"If you looked at $1.4 million and it's invested, let's say that you're averaging 10% rate of return, are you able to live on the 10% comfortably?" Warshaw asked.
"It'll last forever," Ramsey responded. Warshaw agreed, saying that the caller would never have to touch the principal.
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Ramsey's advice is rooted in the belief that if you invest consistently and follow his Baby Steps approach — which includes saving 15% of your income in tax-advantaged accounts — you can generate enough growth to cover your expenses without depleting your initial investment. He maintains that many retirees can live comfortably on the $100,000 in annual returns — depending on a few varying factors like lifestyle, cost of living, and healthcare — that a $1 million nest egg could generate at a 10% rate of return.
The Problem With a 10% Withdrawal Rate
However, David McKnight, author of "The Power of Zero," has challenged Ramsey's approach, calling it unrealistic due to the concept of sequence of returns risk.
"Dave Ramsey is completely ignorant of what is frequently referred to as sequence of returns risk," McKnight said in a recent YouTube video.
Sequence of returns risk refers to the danger that a retiree could experience negative market returns early in retirement, which would significantly reduce the long-term sustainability of their portfolio. McKnight argues that Ramsey's 10% withdrawal assumption is overly optimistic because it presupposes that the market will generate consistent positive returns every year — something history shows is unlikely.
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Instead, McKnight points to financial expert Suze Orman's advice. Orman recommends aiming for a $5 million to $10 million retirement fund and following a 3% withdrawal rate to protect against market downturns and inflation. Under Orman's model, a $1 million nest egg would generate only about $30,000 per year — not the $100,000 Ramsey suggests — which may be a more sustainable long-term approach.
How Much Do You Really Need to Retire?
The differing opinions of Ramsey and Orman highlight the complexities of retirement planning. Ramsey emphasizes the power of disciplined investing and long-term market growth, while Orman takes a more cautious approach, stressing the importance of protecting against market volatility.
Ramsey Solutions acknowledges that there's no one-size-fits-all retirement number. Factors like lifestyle, healthcare costs, inflation, and life expectancy all play a role in determining how much you need. The key, according to Ramsey, is to invest consistently over time and avoid debt.
Orman, on the other hand, recommends aiming for a higher savings target to account for market downturns and unexpected expenses. She once said on the "Afford Anything" podcast that Americans need far beyond $2 million to retire comfortably, even going as far as saying that $10 million should be a minimum for retirement.
More recently, in Orman's blog, she suggests that retirees aim to have 10 times their annual income saved by the time they retire, which for many Americans would mean accumulating significantly more than $1 million if those funds are invested.
Finding the Right Approach
Mcknight asked, "Given this wide disparity between the two biggest gurus in the country, who do we believe?"
Ultimately, whether $1 million is enough for retirement depends on an individual's lifestyle, spending habits, and market conditions. While Ramsey's approach may work for some investors, McKnight and Orman caution that relying on high returns and a 10% withdrawal rate carries significant risk. A more conservative approach that factors in market volatility and sequence of returns risk may offer greater long-term security.
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© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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