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The 4% rule in retirement has been a widely accepted retirement standard for over 30 years.
The rule states that you should draw 4% of your assets from your investments each year in retirement. This should, in theory, allow you to maintain a comfortable standard of living while continuing to let your investments appreciate in value.
However, it seems this longstanding rule could be poised to fall.
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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.
One of the best ways to save for retirement is with an IRA. But with the fluctuations of the market, you may be wondering if there are safer investment options available.
For example, Opening a gold IRA with help from American Hartford Gold combines the tax advantages of an IRA with the inflation-resistant properties of gold.
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.
As one of the nation’s most reputable and trusted precious metal companies, American Hartford Gold is a source for IRAs and direct purchases of precious metals and coins that many retirees trust.
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.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
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.
With SavingsAccounts.com 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.
You can check out Moneywise’s Best High Yield Savings Accounts of 2025 to find some savvy savings options that earn you more than the national average of 0.4% APY.
Invest for passive income in retirement
Dave Ramsey is a huge advocate for finding new passive income streams to pay down debt and build savings. While much of his advice is focused on finding a lucrative side hustle, for those in their golden years, a more relaxed approach may be easier to incorporate.
One of the easiest ways to grow your savings and portfolio is through Acorns, an automated investing and saving platform that simplifies the process of setting aside extra funds.
When you spend on anything — groceries, gas, or bills — Acorns automatically rounds up the price to the nearest dollar and deposits the difference into a smart investment portfolio for you, allowing you to grow your wealth without even thinking about it.
You can also customize how you save.
With an Acorns Silver plan, you get access to Acorns Later, a retirement investment account with a 1% IRA match on new contributions.
You can also opt for Acorns Gold plan, which offers a 3% IRA match on new contributions and the ability to customize your portfolio by selecting your own stocks.
Sign up now and for a limited time you’ll get a $20 bonus investment.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
