Dave Ramsey once told a Ramsey Show caller it's possible to withdraw at 8% in retirement — but Suze Orman has called even 4% 'very dangerous’. Who's right?

However, it seems this longstanding rule could be poised to fall.

A recently retired caller to The Ramsey Show asked host and finance personality Dave Ramsey if it would be safe to go up to a 5% withdrawal rate in order to pay for trips he and his wife wanted to take in early retirement.

Ramsey has said he believes that retirees can earn up to a 12% annual return from mutual funds, and will therefore be safe to withdraw more than the standard 4% per year without jeopardizing their nest egg. He calls the standard rule “absolutely wrong” and “ridiculous.”

But another finance celeb has a very different opinion.

Suze Orman has called the classic 4% rule “very dangerous.”

Orman, a fellow best-selling author and expert, also called for a tweak to the 4% rule in an interview with Moneywise — saying that retirees should only withdraw a maximum of 3% yearly if they are retiring in their 60s.

Who’s right? Here’s what to consider.

The importance of retirement accounts

Ramsey’s advice is based on a number of suppositions that may not reflect the real financial status of the average retiree.

Inflation will eat away at the value of your retirement savings, and it’s very possible that your retirement years could coincide with a period of higher inflation.

That’s not to mention the stock market’s volatility. Many experts believe a consistent 12% return, like Ramsey has optimistically said mutual funds can deliver, may not be likely.

Suze Orman’s advice, on the other hand, is more conservative. She advises retirees to withdraw as little as possible from their savings, which is a safer approach.

Either expert would argue that the best way to make your money last in retirement is to start saving as early and as aggressively as you can.

Gold has historically acted as a hedge against inflation, and many professional investors such as Ben Mallah and Peter Schiff tout it as a solid alternative investment to the stock market and way to diversify your IRA as the price of gold continues to rise.

One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.

Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainties.

To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver on qualifying purchases.

Before you begin investing however, you need a plan. And while Ramsey and Orman make good points on withdrawal strategy, you may need help that's more tailored to your personal situation. If you’re unsure of how to navigate planning for retirement on your own, calling a professional give you some peace of mind.

Advisor.com simplifies the search process by connecting individuals with an exclusive network of fiduciary advisors, each dedicated to transparency and held to high ethical standards.

All you have to do is answer a few simple questions regarding your finances and long-term goals, and Advisor.com will connect you with a vetted expert near you who is best suited for your needs. You can then set up a free, no-obligation consultation to see if they’re the right fit for you.

Boost your existing savings

If you’re already in retirement, you may want to follow Ramsey’s advice on growing your existing savings with safe vehicles like mutual funds. However, many retirees have not considered the benefits of certificates of deposit, whose returns can now exceed 5%.

Between 2008 and 2022, when certificate of deposit rates were practically zero, and their appeal to investors about the same, they fell out of favour. But since the Fed started aggressively raised interest rates to combat inflation, certificates of deposits (CDs) have become a hot topic once more. And even though rates are slowly coming back down, these accounts are still worth a look.

A certificate of deposit is a low-risk savings account that could earn as much interest as a high-yield savings account, possibly more. However, to earn that higher rate, you’ll have to park your money in the account for a certain period of time.

With MyBankTracker you can shop and compare top certificates of deposit rates from various banks nationwide.

Their extensive database shows the most competitive rates, with daily rate updates and personalized recommendations based on your risk preferences and time horizon so you can find the right CD to meet your retirement savings goals.

Parking your savings in these short-term growth funds will allow you to plan year-to-year and continue to grow your savings when you’re on a fixed income.