Alternative to Dave Ramsey's retirement calculator
Can you really retire on Dave Ramsey's 8% rule?
Dave Ramsey tells you to save 15% of income, invest in mutual funds, and withdraw 8% in retirement. Here's what those numbers actually mean — and where his math gets pushback from other experts.
Assumed return
12.0%
Withdrawal rate
8.0%
Savings rate
15.0%
radio host, author of The Total Money Makeover
What Dave Ramsey's Numbers Mean For You
Using Dave Ramsey's assumed 8.0% withdrawal and 12.0% return. "Years to FI" assumes a $50,000 starting portfolio and $2,000/month contributions.
| Annual Spending | FIRE # (Dave Ramsey) | FIRE # (4% rule) | Years to FI |
|---|---|---|---|
| $40,000 | $500,000 | $1,000,000 | 8.8y |
| $70,000 | $875,000 | $1,750,000 | 12.6y |
| $120,000 | $1,500,000 | $3,000,000 | 16.6y |
The Methodology
Dave Ramsey teaches a step-by-step approach he calls the Baby Steps. Step 4 says to invest 15% of household income into retirement accounts — spread across four mutual fund categories (growth, growth & income, aggressive growth, international). His widely-quoted assumption is a 12% average annual return, drawn from long-run US stock market averages. For retirement withdrawals, he tells callers that drawing 8% per year from a portfolio returning 12% is safe because the portfolio grows faster than you spend it (after inflation, ~4% real growth).
Citations
- “Save 15% of income in retirement accounts” — Baby Step 4 — TheRamseyShow.com
- “Expect 12% average annual return on mutual fund portfolios” — Ramsey Show — ramseysolutions.com investing lessons
- “8% withdrawal rate in retirement” — Dave Ramsey Show episodes, 2022–2024
Our Honest Take
Where Dave Ramsey is right
Ramsey's rules are simple, memorable, and have helped millions start saving. Teaching 'invest 15%' beats 'invest nothing' every time. His core move — get out of debt, then invest consistently in low-cost index-style mutual funds — is directionally correct, and the behavior change he drives is worth more than a few basis points of return.
Where we differ
Three issues with the numbers. First, 12% is a nominal long-run US-only average; real returns net of fees and inflation are closer to 6–7%. Second, the 1998 Trinity Study and the Bengen safe-withdrawal research (which created the '4% rule') both concluded 4–4.5% is the safe rate for a 30-year retirement. 8% has a high failure probability — Monte Carlo simulations show 50%+ portfolios run dry within 30 years at that rate. Third, his advice ignores taxes and geography entirely. Our FIRE Calculator uses historically grounded returns, lets you pick your own safe withdrawal rate, and adjusts for the cost of living where you'll actually live.
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Set your own return and withdrawal rate assumptions. Pick any city in the world to adjust your FIRE number for local cost of living.
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Where You Retire Changes Your Number
Dave Ramsey's math assumes a generic US cost of living. The state or country you retire in can move your FIRE number by 30-70%. Start with a tax-friendly state or an international destination:
Browse all 50 US states → · International retirement guides →
This page is an independent educational analysis of Dave Ramsey's publicly stated retirement methodology. It is not officially endorsed by or affiliated with Dave Ramsey or their organization. Retirement planning involves significant uncertainty — consult a qualified fiduciary advisor before acting on any calculation.