What Is My Recommended Retirement Withdrawal Percentage?

Summary

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Podcast Summary: Ramsey Everyday Millionaires

Episode: What Is My Recommended Retirement Withdrawal Percentage?
Date: August 27, 2025
Host: Ramsey Network (George Kamel, Dr. John Delony, et al.)

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Overview

This episode addresses a fundamental question about retirement: How should you determine the percentage of your portfolio to withdraw each year without risking your long-term financial security? The hosts answer a listener’s question about safe withdrawal strategies and explore the mindset and tactics of building a lasting nest egg. They debunk common misconceptions, empathize with retirement anxieties, and provide practical frameworks for both young savers and those near retirement.

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Key Discussion Points & Insights

1. Listener Scenario: Planning Withdrawals for the Long Haul

• Jason from Seattle (Age 28) asks:
  Should you only withdraw from the growth of your retirement savings, or can you dip into the principal if market returns are low?
  • Example: With $1,000,000 in retirement, if the stock market grows 10%, withdraw $100,000. If returns are 3%, should you still withdraw $100,000 or limit yourself to $30,000?

2. Avoiding Sequence of Returns Risk (01:34–02:51)

• George Kamel:

  • Stresses the importance of having cash reserves to avoid selling investments in a down market.
  • Explains "sequence of returns risk," where withdrawing during a market downturn can permanently hurt your portfolio.
  • Quote:

    "If you take $100,000 out when the market's down... you might never fully recover." — George Kamel (01:34)

• Advises to keep 1-3 years’ expenses in a high-yield savings account so you can avoid selling when the market dips. Withdraw from reserves during downturns and replenish them when the market rebounds.

3. Realistic Long-Term Projections (02:52–03:13)

• George calculates that if Jason and his wife continue saving, by 62, with continued investments they could reach around $7 million—well above what most people need for retirement.
• Quote:

  "Even taking out 1% of your $7 million portfolio in retirement, that's $70,000 a year... By the time you actually die, that portfolio is going to be like $50 million." — George Kamel (03:26)

4. Mindsets Around Nest Egg Depletion (01:34–03:26)

• There is no rule requiring you to preserve your entire principal.
• The objective is not to run out, not never touching the principal.
• "Set it and forget it" is the recommended mentality; focus on consistent investments and not riding the emotional ups and downs of the market.

5. Empathy for Those Nearing or In Retirement (04:14–04:59)

• Dr. John Delony: Offers perspective for older savers or retirees experiencing market downturns:
• Quote:

  "So what it feels like a speed bump for John at your age feels like driving off a cliff." — Dr. John Delony (04:37)

• John Delony: Emphasizes that market dips are much scarier for people in their 60s/70s who may depend on their investments for living expenses.

6. Living Below Your Means & Building Security (05:13–05:37)

• George Kamel:
  • Endorses the Ramsey principle of living well below your means, keeping expenses low, and planning for the long term.
  • Quote:

    "Expense is low every single year, no matter what. Building for the future so that if the market does have a dip, you're going to be okay." — George Kamel (05:13)

7. Dangers of Avoiding the Market (05:37–05:55)

• Not investing out of fear—such as keeping money solely in savings accounts—poses greater risk due to inflation eroding purchasing power.
• Invest intentionally; don't let fear keep you on the sidelines.

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Notable Quotes (with Timestamps & Attribution)

• George Kamel:

  • "If you take $100,000 out when the market's down... you might never fully recover." (01:34)
  • "Even taking out 1% of your $7 million portfolio in retirement, that's $70,000 a year... By the time you actually die, that portfolio is going to be like $50 million." (03:26)
  • "Building for the future so that if the market does have a dip, you're going to be okay. You've got cash reserves, you have an emergency fund on top of that." (05:13)
  • "Inflation is going to eat away at your money and so you've got to be investing." (05:37)

• Dr. John Delony:

  • "So what it feels like a speed bump for John at your age feels like driving off a cliff." (04:37)
  • "That's scary because that's a real impact on real money." (04:59)

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Key Takeaways

• Plan for ups and downs: Maintain cash reserves for 1–3 years’ living expenses in retirement to avoid selling investments in a downturn.
• You don’t have to preserve the principal perfectly: Withdrawing a fixed percentage (commonly 4%) is reasonable; you’re not expected to die with your exact principal untouched.
• Start early, invest consistently: The earlier you begin, the more options and flexibility you’ll enjoy.
• Living below your means and controlling expenses is crucial.
• Invest—even when scared: Sitting on the sidelines increases the risk of inflation diminishing your nest egg.

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Important Segment Timestamps

• -- Listener's withdrawal question introduced: 00:18
• -- Sequence of returns risk & cash reserves explained: 01:34–02:51
• -- Compounding and long-term projections for Jason: 02:52–03:13
• -- Retiree perspective on market downturn anxiety: 04:14–04:59
• -- Final advice on living below means & inflation risks: 05:13–05:37

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Transcript

[A]

Foreign.

[B]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Jason is up next in Seattle, Washington. Jason, how can we help today?

[A]

Hi, I have a question about when you go to poll retirement. So my wife and I currently are both 28. Baby steps four, five, and six.

[C]

You're, you're 28?

[A]

Yes.

[C]

And you're asking about the mandatory withdrawal.

[A]

Well done. No, not mandatory. Not mandatory withdrawal. But when the stock market went down recently, it just got me thinking about it because I'm kind of a nerd.

[B]

No, no, Jason, we're the same person. It's fine. Don't listen to John.

[A]

So, I mean, right now we have about $125,000 in retirement, not including my wife's pension. So I think we should be fine by the time we do retire.

[B]

Definitely.

[A]

But when, say, for example, this is a question I've never heard on the show. Say, for example, we only have a million dollars in retirement.

[B]

Okay.

[A]

And you only want to pull off of the growth of the nest egg and never touch the nest egg. Well, if the stock market returns 10%, you then pull, you know, $100,000, but the stock market only does 3%. Do you still want to pull 100 and leave you with 930 for the next year, or would you only want to pull $30,000 and never touch the nest egg?

[B]

That's a great question. And a lot of, if you meet with pretty much any financial planner, they're going to look at your whole situation and go, okay, let's have some cash reserves set aside so that in a market downturn, you, you don't create what's called a sequence of returns risk. And what that says is essentially what you're explaining is, hey, if you take 100,000 out when the market's down and then the market's down the next year and you take that same hundred thousand out, you might never fully recover, quote, unquote. Back to your principle, right? The other theory is that you always need to have the principal balance, no matter what. Well, that's a pretty insane theory. There's no rule that says you have to die with $5 million left in the bank. And so it's okay to see that balance go down over time. Obviously, the goal here is to not run out of money. And so what I, what my goal personally when I'm in retirement age is to have so much money that it's not going to be a problem to pull the amount I need for expenses and some fun money. And on top of that, I'm going to have cash reserves, likely of one, two, maybe even three years of living expenses set aside by retirement age, and a liquid, you know, high yield savings account ready to protect me in case of those market downturns. So let's say the market was down 22% one year. Well, I'm probably just going to use my high yield savings money that year and then replenish it when the market is back up.

[A]

That makes sense.

[B]

So that's a way to kind of mitigate all the risks, and you're not as worried about living off the retirement. But I just crunched the numbers for you. You're 28 by the age of 62. Let's say you invest 1,000 bucks a month on top of the 125 you guys have.

[A]

Mm.

[B]

That's $7 million. That's 62.

[A]

Yeah.

[B]

Not counting Social Security or pension.

[A]

We should be fine. I don't know if we can actually burn through that amount of money.

[B]

Exactly. And that's the thing. The nerds like us, Jason, these are problems we'll never actually experience.

[C]

Burn through $7 million in a weekend, dude. I mean, man, your wife married well, brother. Because I could put a hurting on $7 million.

[B]

But even. Even taking out 1% of your $7 million portfolio in retirement, that's 70 grand a year after 1%, which means by the time you actually die, that portfolio is going to be like $50 million, most likely because it's going to continue to grow far outpacing what you can spend. But it's a great discussion to have. It's a fun, nerdy discussion to have. And if it is something that you want more clarity on, I would connect with a smartvestor pro to go, hey, can you just lay this all out for me? I'm 28. Here's how much we're investing. Lay out all the scenarios, run some simulations as to what could happen based on past market returns. But really, I just set it and forget it and go, it's going to be fine. I'm going to have more than enough, and you're not going to be riding the edge every year going, the market's down. I'm freaking out. You just go, yawn. It went from 7 million to 6.8, and we can still live to fight another day.

[C]

I do think, though, George, this is me clowning on myself a little bit. Like, I'm always telling people, don't look, it's a roller coaster. It's Whatever. My parents are in their 70s and so a dip or like a recession, I can go, you know what, there's recessions every 10 or 15 years. I'm gonna be fine. That's scary, right?

[B]

So what it feels like a speed bump for John at your age feels like driving off a cliff.

[C]

If you got into the Ramsey, you know, plan and you, when you're in your 50s and you've just got enough to cover your bills and suddenly the market's down 20% and you're 76 like that, like, I guess it's a reminder to me to have compassion for folks who are watching this thing really closely, especially folks who are about to go to retirement or in retirement. That's scary because that's a real impact on real money.

[B]

Yeah, I'm more Flipp a 28 year old who's thriving than I would if this was a 68 year old calling saying, I have $300,000 in my nest egg total, what should I do?

[C]

And the market just went, lost $7 trillion or whatever it did a couple weeks ago. Like it's just got gnarly.

[B]

And it's a great reminder of the importance of living below your means for a long, long time. Expense is low every single year, no matter what. Building for the future so that if the market does have a dip, you're going to be okay. You've got cash reserves, you have an emergency fund on top of that. And, and so that would be my encouragement to anyone out there who's on the path building for retirement. Now if you're in retirement and you don't have money, that's a different problem.

[C]

Right.

[B]

But don't just sit on the sidelines going, well, I'm scared of the market so I'm just going to put it in a savings account. You have a bigger risk there. Inflation is going to eat away at your money and so you've got to be investing. And if you want a free investing guide, we've got it for you. Just go to ramseysolutions.com guide. It pretty much covers everything you would need to know about investing and more and it's completely free.