Dave Ramsey and Ramsey Solutions on 7 Smart Ways to Take Money in Retirement

"What you don't want to do is draw out so much that you end up running out of money before your life is over."

That is the retirement withdrawal warning Dave Ramsey has repeated on Ramsey Everyday Millionaires. While retirement advice often centers on building savings, Ramsey focuses on a different challenge: turning a lifetime of accumulation into a dependable income stream.

The consequences can be serious. Some of the costliest financial missteps happen after retirement begins, when withdrawal decisions can influence taxes, Medicare expenses, investment growth, and how long savings will last. Ramsey's advice has drawn criticism, especially around withdrawal rates, but it has also influenced the retirement plans of many Americans.

Protect the principal

At the center of Ramsey's guidance is the idea that your core savings should be protected. He often compares a retirement portfolio to a goose that lays golden eggs. If you withdraw more than the portfolio earns in a year, you are forced to spend down the principal.

Over time, that can drain the nest egg entirely. In Ramsey's terms, you would have eaten the goose and would no longer be collecting golden eggs.

Leave Roth accounts for the end

Although it may seem sensible to use tax-free money first in order to keep taxes low, Ramsey Solutions recommends the opposite approach. Its preferred order is to start with taxable brokerage accounts, then move to traditional pre-tax retirement accounts, and keep Roth accounts for last.

That strategy allows a Roth IRA or Roth 401(k) to stay invested longer, giving tax-free money more time to compound.

Ramsey Solutions treats the Roth vehicle as the strongest option for long-term growth, which is why it teaches a conventional drawdown sequence designed to preserve that tax-free compounding for as long as possible.

Challenge the usual tax-diversification strategy

Many financial advisers encourage workers to spread savings across traditional, Roth, and taxable accounts to create so-called tax diversification in retirement.

Ramsey Solutions strongly disagrees with that approach. The firm argues that savers should maximize Roth contributions whenever possible before turning to other account types. The main exception is an employer 401(k) match, which they say should never be left on the table.

Use returns and inflation to guide withdrawals

Ramsey says a withdrawal rate should be based on three factors: the amount invested, the average return on those investments, and the average inflation rate. In a recent episode of Ramsey Everyday Millionaires, he said long-term averages were about 12% for returns and 4% for inflation over roughly four decades.

Using that framework, he told a caller with $1 million saved that withdrawing 8% or less a year, or about $80,000, would be fine.

Stay invested in stocks

One of the most distinctive parts of Ramsey's approach is his rejection of the common move into bonds during retirement. Many mainstream advisers recommend shifting toward fixed-income investments with age to reduce risk.

Ramsey, however, advises staying fully invested in equity mutual funds, saying retirees should continue prioritizing growth.

View Social Security as extra income

Ramsey Solutions says retirees should not depend on Social Security to carry their lifestyle. Instead, it should be treated as a modest supplement rather than the main source of retirement income.

The firm has described Social Security as "icing on the cake, not the cake itself." That is far different from the reality for many older Americans, since more than two-thirds of seniors rely on Social Security for over half of their retirement income.

The disputed 8% rule

One of Ramsey's most debated recommendations is an annual withdrawal rate of 8%, well above the widely cited 4% guideline. He argues that if the stock market has historically averaged about 12% annually, a retiree can withdraw 8% and leave the remaining 4% to offset inflation.

That idea depends on a very aggressive investment mix, though. It also does not factor in sequence-of-returns risk, which is the danger of a market decline right as withdrawals begin.

What it all adds up to

Following Ramsey and Ramsey Solutions on retirement withdrawals means adopting a more aggressive, growth-focused mindset than many traditional planners recommend. Where conventional advice often emphasizes caution and bond allocations, Ramsey leans fully into stock-based investing.

He also stresses that retirees can improve their budgets by lowering fixed expenses before leaving work. Cutting consumer debt, in particular, can reduce monthly obligations and make annual withdrawals go further.

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