Dave Ramsey Says $1 Million Retirement Account Can Provide $80,000 Annual Income

Dave Ramsey said a $1 million retirement portfolio should generate an $80,000 annual income that can be maintained indefinitely. Ramsey made the statement during an episode of "The Ramsey Show" while responding to a caller named Jay. Jay, age 30, reported roughly $120,000 saved in retirement accounts and asked about withdrawal-rate guidance.

Ramsey criticized a 3 percent withdrawal rate referenced by co-host George Kamel. He said the figure was incorrect and stated he would seek to have the related video removed.

Ramsey explained his calculation by assuming 12 percent average annual returns and subtracting 4 percent for inflation adjustments. He said the remaining 8 percent would support the $80,000 withdrawal. He added that lower withdrawal assumptions create unnecessary fear among people already saving for retirement.

Ramsey described some online discussions of conservative rates as "bogus math" that discourages savers.

Other financial commentators have recommended lower withdrawal rates. Suze Orman has advised rates near 3 percent for early retirees facing longer time horizons. Morningstar research has also examined sustainable withdrawal rates under varying market conditions.