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Alternative to Dave Ramsey's investment calculator

Dave Ramsey's 12% investment return: what it compounds to — and why the number is contested.

Dave Ramsey tells callers to expect 12% annual return from mutual funds. That's the highest 'expected return' number in mainstream personal finance. Here's what 12% actually compounds to over 30 years, and what 7% — the number most academics use — gets you instead.

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 SpendingFIRE # (Dave Ramsey)FIRE # (4% rule)Years to FI
$40,000$500,000$1,000,0008.8y
$70,000$875,000$1,750,00012.6y
$120,000$1,500,000$3,000,00016.6y

The Methodology

Ramsey cites the S&P 500 long-run nominal (pre-inflation) return from 1928–present as justification for 12%. That number is ~10% nominal, ~7% after 3% inflation. The difference compounds: $500/mo invested for 30 years at 12% = ~$1.75M; at 7% = ~$610K. Ramsey is not wrong about the historical S&P 500 nominal number, but the 'real purchasing power' result is closer to 7%.

Citations

  • “12% average annual return from equity mutual funds” — Ramsey Show, 'Is the 12% Expected Return Realistic?'
  • “S&P 500 long-run nominal ~10%” — NYU Stern, 'Historical Returns on Stocks, Bonds and Bills: 1928-2024'
  • “Post-inflation real return ~7%” — Shiller data, inflation-adjusted S&P 500 returns

Our Honest Take

Where Dave Ramsey is right

Ramsey's behavioral advice — invest consistently, don't try to time the market — is right. Someone investing 15% of income in index-style mutual funds will build real wealth regardless of whether the number is 7% or 12%.

Where we differ

Our calculators default to 7% real (inflation-adjusted) because that's what your portfolio actually buys in future dollars. We let you set 12% if you prefer Ramsey's framing — but we show the inflation-adjusted result alongside so you can see both.

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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:

Florida

No income tax

Texas

No income tax

Portugal

D7 + NHR

Thailand

Territorial

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.