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Following This Dave Ramsey Rule Could Quietly Drain Your Retirement Savings

Make sure you're not making this mistake.

By Catherine Collins , Edited by Laura Hohenstein

Updated Aug. 7, 2026

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If you've spent years diligently contributing to a retirement plan, you may be wondering how much you can safely withdraw each year. Financial experts recommend starting withdrawal rates ranging from about 3% to 8%, which can make it difficult to know which approach best fits your retirement.

Here is what Dave Ramsey recommends, along with a few other personal finance experts.

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Dave Ramsey recommends an 8% withdrawal rate

Dave Ramsey, one of the best-known personal finance personalities, says he would be comfortable with an 8% withdrawal rate. He argues that this approach allows retirees to maintain their lifestyle while still preserving enough savings for the future.

However, this is a departure from the most commonly followed retirement withdrawal rate, which is the 4% rule. When Ramsey mentioned this withdrawal rate on his radio show, it drew criticism from many different members of the personal finance community.

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Why Ramsey's math may fall short in real markets

Ramsey's retirement math might not work in specific markets or with certain portfolio mixes. For example, if someone retires in a down market and withdraws 8%, they encounter a sequence-of-returns risk. This describes the negative impact of making early retirement withdrawals in a down market.

Essentially, the same planned withdrawal represents a larger share of a portfolio after it loses value. Selling more investments while prices are down can leave less money available to benefit from a future market recovery.

How William Bengen developed the 4% rule

The most common retirement withdrawal rule is the 4% rule. This rule comes from William Bengen, a financial planner. The Journal of Financial Planning published his work in 1994, which showed that if retirees withdrew 4% in their first year of retirement and adjusted for inflation after that, their retirement portfolio would likely last for 30 years. Although nothing is guaranteed, it provided a framework that many financial advisors still use to this day.

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Morningstar recommends a 3.9% starting rate

Morningstar is a financial services and research firm that regularly updates its recommended withdrawal rate for retirees. In 2025,

Morningstar recommended a 3.7% withdrawal rate. However, they recently raised the recommended withdrawal rate to 3.9%.

Morningstar's latest research estimates a 3.9% safe starting withdrawal rate for retirees seeking steady, inflation-adjusted spending over 30 years under its base-case assumptions.

Suze Orman and Wade Pfau favor a more conservative approach

Other financial experts, like Suze Orman and Wade Pfau, take a more conservative approach to retirement withdrawals. For example, Orman says to spend no more than 3% of your account value in year one, and then adjust after that. She recommends that retirees withdraw only 4% if they start withdrawals at 70.

Wade Pfau, a retirement-income researcher, says retirees also need to consider taxes when setting a withdrawal rate. Roth withdrawals may be tax-free, while taxes on dividends, interest, and capital gains in a taxable brokerage account could reduce the amount a retiree can sustainably spend.

Bengen later revised his classic 4% rule

In 2026, Bengen updated his classic 4% withdrawal rate to be 4.7%. He revisited his research, which has been widely used, and noted that he added a different asset mix when creating example portfolios. His updated research found that a 4.7% starting withdrawal rate survived the worst historical scenario he studied when using a more diversified portfolio. That doesn't mean 4.7% is appropriate for every retiree.

Of course, retirees will need to decide for themselves what the best withdrawal rate will be. No single withdrawal rate works for everyone. The right starting rate depends on factors such as your retirement timeline, portfolio mix, taxes, spending needs, and market conditions.

However, each person has different needs, expenses, and risk tolerances. A financial planner can help retirees monitor the market and suggest withdrawal rates year to year.

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Retirement involves regular planning and thoughtful spending

Ultimately, retiring successfully involves regular planning. It also involves thoughtful spending to maximize your retirement contributions. Retirees may need to stay flexible with their withdrawal plans, depending on market performance year to year. It's also prudent for retirees to manage their spending, especially early in their retirement, as some expenses, like healthcare, increase as you age.

Ramsey, though he is more aggressive in his withdrawal-rate recommendations, does encourage his followers to be completely debt-free going into retirement, including their mortgages. Being debt-free can help retirees improve their cash flow, which means they may not have to make as large a withdrawal each year to maintain their lifestyle goals.

Bottom line

After decades of working and contributing to retirement accounts, there's no doubt that meeting your retirement goals is exciting. However, your financial planning doesn't stop once you leave the workforce.

In fact, it's important to consistently revisit your retirement strategy to ensure you're making choices that will help your portfolio last for many years. Reducing debt, monitoring your spending, and staying flexible with withdrawals could help make your retirement finances more manageable.

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Author Details

Catherine Collins

Catherine Collins is a nationally recognized personal finance writer with 15 years of experience who has made 401(k)s her specialty. She covers the policy changes, tax implications, rule updates, and common mistakes that shape how Americans save for retirement, translating Washington proposals and regulatory shifts into practical guidance. Her bylines include U.S. News and World Report, Newsweek, Money, and Entrepreneur.