Financial Face-Off: Dave Ramsey vs. Suze Orman

I'm perfectly comfortable drawing eight. Dave's aggressive approach of an 8% withdrawal rate, it could work in an all-stock portfolio in a bull market. I think it's very dangerous. I think it should be lowered to at least 3%. Suze's methodology of a 4% distribution rate, and maybe as low as three, she says it works well from a more conservative stance in the event of a bear market during the early years of one's retirement. You can see our dilemma. Who's right? Retirement planning is just not a one-size-fits-all. Think about it like a custom-made suit. What fits perfectly on one person, it may not fit perfectly on the [Music] next.

Hey everyone, welcome to another edition of We're Talking Money. I'm Phil Clark, wealth advisor at OmniStar Financial Group. Today we're diving into retirement income planning, and that's guided by two giants in the financial advice arena, Dave Ramsey and Suze Orman.

Now, Dave Ramsey, he has built an empire on books, subscriptions, his radio and podcast shows. Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people. Dave is very successful. Suze Orman, she's done it a little bit differently, but very popular, powerhouse of a show host. She commands up to $200,000 per speaking engagement. These two exude success. Their advice must be right, right?

They have very different takes on retirement strategies. In fact, they have a different take on the financial landscape in general. Let's break it down. On one side we have Dave Ramsey. He is very well known for his bold and aggressive approach. Recently Dave Ramsey ranted about an 8% withdrawal rate being sustainable throughout your retirement years. These morons who live in their mother's basement with a calculator, and then you put that out into the dad gum community, and then people go, I don't have enough money. He obviously wants everyone to start out their retirement with a bang.

Let's talk about Suze Orman. She takes a different approach. In fact, she recommends a maximum 4% withdrawal rate during retirement. It's when you are invested in the stock market today and you are taking out 4% a year to live on, you're going to find yourself in big-time trouble.

She also uses a formulaic process to decide what amount of your portfolio should be invested in stocks. Suze says if you subtract your age from the number 10, you'll come up with the appropriate amount of stock allocation for your portfolio. So for example, a 65-year-old who subtracts their age from 10 would assume that a 45% allocation to stock is perfect for them, so says Suze. For me, other things matter just as much, if not more.

You can see our dilemma. The question: who's right? It's simple. Eight is what's left over. All these goobers out there have always put this 4% crap in the market. Why is it that stupid, though? Like, I just, it's too low. What about the 4% rule today? I think it doesn't work anymore. I think it's very dangerous. I think it should be lowered to at least 3%.

If we look at the merits of each, we'll find that Dave's aggressive approach of an 8% withdrawal rate, it could work in an all-stock portfolio in a bull market. On the other hand, Suze's methodology of a 4% distribution rate, and maybe as low as three, she says it works well from a more conservative stance. It serves as a great safety net in the event of a bear market during the early years of one's retirement.

But the fact of the matter is, no one can call a bull or a bear market. They certainly can't do it consistently. So if you don't know when a bull or a bear is about to occur, it makes sense that this style of investing literally leaves you on potential for extreme outcomes. Either you're super low on your income or you're super high on your income.

My point is simple. Retirement planning is just not a one-size-fits-all. Think about it like a custom-made suit. What fits perfectly on one person, it may not fit perfectly on the next. So how do you know which approach is right for you? Well, this is where a good financial planner or wealth advisory team comes into play.

Of course Ramsey and Orman will tell you, just listen to what they say, everything will be okay, save the cost of an advisor, you don't need one of those, you can do it just following our tips. What's wrong with that logic? Well, it's illogical, to start. These powerhouses can offer some very valuable insight, but they can't cover all the bases. Why? It's because they don't know you or your situation, and they certainly can't care about your success. After all, they don't know you.

Having a trusted advisor who's on your team that can design a personalized plan for you, it's going to give you a much better chance at success versus listening to the talking heads. Now, general advice is not a bad thing, but don't let anyone persuade you into believing that your situation is so simple that a radio host can yell a solution loud enough until it works. Somebody ought to smack you. That's stupid. It's stupid.

The journey to financial freedom, it's more of a marathon, it's not a sprint, and retirement planning, that is no exception. So whether you're following Ramsey's bold footsteps or Suze Orman's more cautious path, talk to an advisor, get a second opinion. Use someone who can get to know you, your dreams, your goals, your vision. There are no do-overs when it comes to wealth building or retiring income.

That's all for this episode, and I hope that it has inspired you to go beyond a radio host for your financial success. I hope you'll subscribe to our channel, hit the thumbs up, and make sure to ring the bell so you never miss great content we're putting out every week, all designed to help you make better financial decisions. I'll see you next time on We're Talking Money.