I have never seen my LinkedIn feed blow up with so much Dave Ramsey content from other financial advisors as I did about one year ago. Keep in mind, Dave Ramsey and most financial advisors do not get along. There is a hate-hate relationship between the two parties. I'm not sure why - probably most of it relates to how financial advisors think Dave Ramsey's 10-11-12% market return estimates are incorrect, a lot of it is jealousy (from the financial advisor side as they don't have 10 million people tuning in to hear their advice), and some of it is just good ole fashion financial planning - we're dealing in a world of unkowns so two people can have an opinion and actually both might be wrong!

While this isn't the video that set Social Media, YouTube, and Reddit ablaze, it's one that gets to the same argument: What Should My Retirement Withdrawal Rate Be?

So this begs the question - is my friend Dave Ramsey right? Is the 4% rule just outdated information from a bunch of broke financial advisors (by the way, I would agree - most financial advisors are actually broke because of too high a lifestyle)? Or said another way......

"How much can I safely pull from my portfolio each year without running out of money?"

Let’s talk about that—without the fluff, without the Wall Street double-speak, and from a Financial Advisor that does LOVE Dave Ramsey and the folks at Ramsey solutions but is also deeply rooted in academic financial planning (see my designation library for a proxy on that).

The 4% Rule: Where It Came From (And What It Really Means)

Back in 1994, a guy named Bill Bengen did something that no financial advisors had done at the time: he actually ran the numbers. He sought to determine the safe annual withdrawal amount from a portfolio that would last 30 years, despite potential wars, recessions, inflation, and market crashes.

Bengen’s research used historical market data from 1926 to 1993. He built a simple portfolio:

• 55% US Large Cap Stocks (think: VOO)

• 40% Intermediate-Term Bonds (think: BND)

• 5% Cash (think: US Treasury)

  
  

He tested every possible retirement start date within that window, using quarterly start dates, including the absolute worst-case scenario: retiring in October 1968, right before a brutal stretch of high inflation and lousy markets.

What he found was this: if you withdrew 4.15% of your portfolio in year one, and then increased that amount each year for inflation, you would not have run out of money in any 30-year period. In the worst-case scenario (October 1968), the retiree would have seen their last check bounce, meaning they would have run out of money at the end of the 30 years, but every other retiree would have had something left.

That’s right—4.15% was the worst-case success rate. And because people like simple rules, it got rounded down and became known as “The 4% Rule.”

So when my friend Dave Ramsey says 4% is too low, is he right? Based on history, more than likely, yes, he is correct. Are you getting ready to enter a decade where inflation is going to run at an average of about 7% per year, so your withdrawal will need to increase by that amount each year, to break even, while the stock market delivers nominal total returns of just 1.6%? I pray the answer is no, and therefore you can probably take a higher withdrawal rate than 4%. As a matter of fact, Bill Bengen agrees....

It Gets Better: Bengen’s Research Didn’t Stop There

After publishing his original work, Bengen kept refining the data. In his book “A Richer Retirement,” he explored how diversifying into more asset classes could increase that safe withdrawal rate. If you would like to read this book by Bill Bengen (be careful, it is a tough read, as it is very numbers-oriented), please contact your Financial Advisor to see if your relationship qualifies you for a free copy.

Here’s what he found:

• Adding US Small Cap Stocks (which we call Aggressive Growth) increased the rate to 4.5%

• Including even more categories like Micro Caps, Mid-Caps, International Stocks, and Treasury Bonds pushed the number closer to 4.7%

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In other words, a well-diversified portfolio—like the ones we build at Whitaker-Myers Wealth Managers—can give retirees a better shot at a higher withdrawal rate without increasing risk, even in the worst-case scenario (Oct 1968).

But Let’s Be Clear: This Is About Smart Risk, Not More Risk

Bengen’s findings didn’t include fancy hedge funds or speculative plays. He wasn’t chasing yield. He proved that good asset allocation makes a difference—especially when markets get choppy. Dave Ramsey says, money is like manure, left in one spot, it stinks, spread out, it helps things grow. Ecclesiastes 11:2 says, "Give a portion to seven, or even to eight, for you know now what disaster may happen on earth." So it's Biblical and Bengen approved!

That said, you need to be careful when you start adding conservative assets like bonds. If you're 30, 40, and sometimes even older, we’re not putting you in bonds just because retirement is on the horizon. You don’t have a sequence of return risk yet. However you might be in bonds and you don't even know it!

Ever heard of something called a Target Date Fund? This is a fund that does the investing for you. It was an excellent invention for 401(k)s because many people didn't know what to invest in and didn't have access to a Financial Advisor. However, even the most aggressive target date funds, such as the Vanguard Target Retirement 2070 Fund, has 8% of the portfolio in bonds. Think about that - this person is retiring in 2070. We are in 2025 as of the writing of this article. This hypothetical 20-year-old that is being put into this fund in their 401(k) has 45 years until retirement, and you're placing 8% of the money in an asset class that has historically delivered half the returns of the stock market, therefore taking double the time actually to double, on those dollars.

I was in Chicago last year for a training from the Investments & Wealth Institute while obtaining my Retirement Management Advisor (RMA®) designation. Christine Benz came in to do one of the trainings. She is great! One of the best minds on retirement planning in the country, and she works for a great research firm, Morningstar. I asked her this question: "Why do 20, 30, 40, and sometimes older individuals need bonds in their target date funds? I know they need them at some point closer to retirement, but why now, why at 20?" I don't want to say she didn't have an answer - who knows, she probably doesn't want to upset the big boys like Vanguard, but she said this, "John-Mark, that's why they have you (Financial Advisor), and if they don't have you, a target date fund is better than sitting in a money market with all your money." I 1000% agree, Christine! Get a good Financial Advisor.

But once you do hit retirement, the game changes. Now you’re not just building wealth—you’re drawing from it. And the timing of your withdrawals can work for you or against you. And this is where you can't go all in on stocks, like Dave implies someone is doing in the video mentioned above. Read my article, Bear Markets, Normal Not Fun to completely understand why you can't be all in on stocks during retirement. You might have an entire year that stocks will be dropping, and thus you shouldn't be selling. You might have 1.7 years (603 days) that you need to wait until stocks get back to where they were (or even longer). That necessitates another type of asset class (see Ecclesiastes 11:2 above).

Enter: Monte Carlo Simulations (A Fancy Name for Real-World Stress Testing)

While Bengen's research showed us that 4.15% was the most that could be taken out in a worst-case scenario, and even that can be improved by incorporating some sound Biblical wisdom into your portfolio, that was the worst-case scenario. Bill Bengen has mentioned in a recent interview that 4% was the worst-case scenario, 12% was the best-case scenario (if you were the luckiest retiree), and the average withdrawal rate was 7% based on his research. So he argued, if you were to make a rule out of his work, you would call it the 7% rule, not the 4% rule. However, 7% means there are scenarios where historically you would have been unlucky (not the unluckiest retiree, just unlucky) and you would have run out of money despite taking a 7% withdrawal rate. How would I measure the risk of taking such a withdrawal rate?

At Whitaker-Myers, we don’t just cross our fingers and hope. We run Monte Carlo analysis—a powerful tool that runs your retirement plan through 1,000+ different market scenarios to test one thing:

It’s not based on average returns or best-case outcomes. It’s based on reality: markets crash, inflation spikes, recessions happen. We test your plan against all of it.

If you’re planning to withdraw 4%, 5%, 6%, 7%, 8%, 9%, 10%, etc, we want to know:

• How often does that succeed over a 30+ year retirement?

• What if you live longer than 30 years?

• What happens if inflation goes nuts?

  
  

Monte Carlo gives us insights into what those answers could look like.

How We Help Boost Your Withdrawal Rate (Without Gambling)

We’re not in the business of stretching any withdrawal rate to make things look good on paper. But there are real-world ways we work to improve the numbers:

1. Turning Off Dividend Reinvestment

If you're taking monthly withdrawals, it doesn’t make sense to reinvest dividends automatically. Why? Because dividends and interest arrive on a predictable schedule. That means if you need $2,000/month and you're receiving $700 in dividends, you're only relying on $1,300 from market-timed withdrawals. That helps reduce sequence risk.

One of my favorite books, "What The Happiest Retirees Know", author and financial advisor Wes Moss argues for an all dividend portfolio to meet your income needs. I don't know if I agree with that, as I don't want to miss out on those companies that have a pitiful dividend payment (or none) but have grown, because they're changing the world like Nvidia and Tesla. But we definitely believe in some dividend stocks or funds, and in our opinion, at retirement, those dividend reinvestments should be turned off.

2. Private Equity & Private Credit

For qualified investors, we may recommend private market investments like private credit, which tend to have higher yields and less emotional volatility. Since these aren’t priced daily like public stocks, you're not tempted to make rash decisions when markets get ugly.

This isn’t magic—it’s just thoughtful planning and using tools the average investor doesn’t even know exist. You can read a recent article I wrote about this subject: Where Have All the Aggressive Growth Stocks Gone?

3. Rebalancing

Rebalancing is one of the most innovative, most disciplined ways we help boost your retirement withdrawal rate. It means regularly adjusting your portfolio back to its target mix—selling some of what’s gone up and buying what hasn’t. Over the last 30 years, the stock market has been up about 80% of the time (annually), and in those up years, the average return is nearly 20%. That’s when we take gains from high-performing assets like stocks and move them into more stable, non-correlated investments like bonds, real estate, or U.S. Treasuries. This locks in profits and reduces exposure before the next market downturn. So instead of gambling or chasing returns, you're consistently buying low and selling high—on purpose.

When the crash does come (and it will), you’re not forced to sell stocks at a loss to fund your retirement. You’ve already moved some of that growth into assets that tend to hold up better, giving you income and stability when it matters most. This strategy protects your portfolio from the sequence of return risk, especially in the early years of retirement. Rebalancing isn’t market timing—it’s risk management that helps your money last longer. At our firm, this is done through a mixture of technology and our excellent trading team!

So... What’s Your Withdrawal Rate?

If you’ve saved well, appropriately diversified, and built your plan with a team that knows what they’re doing, you might be able to withdraw more than 4%—safely. Anyone who tells you it can only be 4% doesn't understand the research. Anyone who tells you that you can withdraw 10% or 11% doesn't understand non-sequentially returns (the stock market doesn't go up in a straight line).

But here’s the bottom line:

That’s why we don’t give cookie-cutter advice. We build a custom withdrawal strategy around you, backed by research, battle-tested by history, and confirmed by real-world simulations.

If you're nearing retirement—or already there—don't guess your way through this. And most importantly, we don't put our hope for future success, happiness, and prosperity in our withdrawal rate. 1 Timothy 6:17 says, "As for the rich in this present age, charge them not to be haughty, nor to set their hopes on the uncertainty of riches, but on God, who richly provides us with everything to enjoy"