Personal FinanceCanva | dimaberlinphotos and dashapetrenkophotosJoey FrenetteIt can pay some pretty sizeable dividends to listen to the voices of popular personal finance gurus like Dave Ramsey and Suze Orman. Indeed, for those looking to take command of their financial futures, whether that entails getting out of deep debt, making the finishing touches on a retirement fund, or simply getting started on one’s investment journey after starting a career fresh out of college, Ramsey and Orman do their best to help their callers stay on the path.More importantly, they may be able to offer tips and tricks to steer clear of those financial pitfalls that some less-informed folks may drive directly into. For the most part, I’m a big fan of both personal finance pundits and think it’s never a bad idea to listen in on a show that could help bolster one’s financial literacy. Although Ramsey and Orman are some of the top voices in personal finance, some of their viewpoints differ drastically.Indeed, in a prior piece, I’ve described Ramsey as more aggressive (but optimistic) with some of his retirement viewpoints than Orman. Though leaning more conservative on the retirement side of things may be less risky, I’d argue that it’s tough to tell whether Ramsey is too aggressive or if Orman is too conservative (or pessimistic), especially regarding the size of one’s nest egg prior to retirement.
The “magic” retirement figure will differ for everyone. As always, consulting a financial advisor is advisable!
Dave Ramsey thinks you need $1 million to retire on. Orman thinks that number is around 10x higher. Who’s right?
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The $1-10 million-dollar question for prospective retireesOf course, if you follow Orman’s advice and bank $10 million to fund an early retirement, you’re far less likely to run out of money in retirement. That said, I’m also not convinced Ramsey’s advice will lead you down the path of running short of cash at some point down the retirement road. He makes a good argument for why you may not need as much as some of the more conservative personal finance experts say you’ll need before you can retire. As always, it’s impossible to tell the future.Ramsey, who recommends an 8% withdrawal rate (double that of the traditional 4% rule), thinks a million bucks is enough to fund a retirement so that it doesn’t run out of money. The more aggressive withdrawal rate entails a more aggressive investment strategy (much more exposure to stocks).While Ramsey’s solution, I believe, holds up if stocks continue to appreciate at a rate close to historical averages (let’s say aver