Regarding retirement, the most common questions asked are “How much do I need?” and “How should I save or plan?” Financial experts and gurus often provide guidance but have many different philosophies.
While setting retirement savings goals and withdrawal strategies can seem complex, established frameworks simplify key factors like savings rates, income replacement ratios, risk management, and sustainable withdrawal rates. Customizing your retirement plan helps you understand core advice from leading financial minds on best practices.
Keep reading to learn actionable recommendations from five financial experts to showcase prevailing wisdom on retirement planning concepts. The selected perspectives come from prolific thought leaders across radio, television, publishing, and blogs.
By blending insight from various expert philosophies, you can craft an informed retirement strategy tailored to your financial life vision and risk preferences. Whether you feel an affinity to one expert over others or appreciate components of each approach, this overview frames vital principles to help optimize your preparations for post-career life.
Financial experts have a wide range of opinions on these critical questions. While they provide great insight, remember that no one knows your situation better than you. Consider the advice that best aligns with your goals and consult a professional who knows your current circumstances for personalized advice.
In this article, I’ll summarize the retirement recommendations from five well-known finance gurus:
While their philosophies vary, these icons deserve your attention thanks to proven personal success and millions of followers.
First, we’ll cover Dave Ramsey, with over 18 million weekly radio listeners. Ramsey built his empire after turning around his finances, becoming debt-free, and amassing wealth through savvy real estate investing along with his business, Ramsey Solutions.
We’ll also look at detailed guidance from Suze Orman, whose award-winning CNBC television program ran for over a decade. Orman connects with everyday Americans thanks to simple money maxims from her waitressing experience before making it big.
In addition, you’ll learn tips from Mr. Money Mustache, alias of Peter Adeney. He attracted a cult following after cutting expenses to the bone allowed him to retire in his 30s, proving financial independence is possible on modest salaries.
We’ll also touch on author David Bach, who writes approachable personal finance bestsellers like “The Automatic Millionaire.” His credible advice stems from decades of helping large firms manage wealth.
Lastly, we’ll feature input from “Rich Dad Poor Dad“ icon Robert Kiyosaki. While controversial, his belief in assets over frugality resonates thanks to his rags-to-riches backstory.
While their credentials are impressive, the most crucial guru is yourself. Take what aligns best with your retirement goals. Let’s dive into the key recommendations from each financial educator.
Save 15% and Withdraw 8% – Dave Ramsey’s Approach.
Dave Ramsey advises saving 15% of your income each month. He assumes you can get a 12% annual investment return and withdraw 8% per year in retirement (after adjusting for 4% inflation).
- To have $50k in annual retirement income, under his projections, you would only need $625k saved.
- This is based on very aggressive market returns and withdrawal rate assumptions.
- The market historically returns about 10% per year on average
- Most experts recommend a 4-5% withdrawal rate
- The upside is you potentially need less saved for retirement
- The downside is a higher risk of running out of money if projections don’t pan out
- Whether this works out has a lot to do with your lifespan and the rate of inflation
The 4% Rule – Suze Orman’s Recommendation
Suze Orman stands by the “4% rule” – withdrawing 4% of your retirement savings annually. She also recommends more conservative buffer strategies:
- Have 2-3 years of living expenses saved in an emergency fund
- Don’t adjust withdrawal for inflation in the first three years
- To have a $50k annual income, you would need $1.25 million saved
Her advice aims to minimize the risk of outliving savings, even if it means planning for higher balances.
Cut Expenses So You Need Less – Mr. Money Mustache
Mr. Money Mustache (Peter Adeney) became well known for cutting expenses drastically, allowing him to retire in his 30s. His philosophy focuses on spending less so you need less money:
- The primary goal is to increase the savings rate
- It also utilizes the 4% rule for retirement withdrawal
- The critical point is expenses dictate how much you need to save
Follow his lead to maximize your lifestyle while minimizing the required savings.
Save 10x Your Income – David Bach’s Advice.
Author David Bach preaches “pay yourself first” by saving and investing money before spending on discretionary items. His savings recommendations depend on your goals:
- Save 10-15% to be “rich” (afford your current lifestyle)
- Save 15-20% to retire early
- Keep saving until you hit 10x your annual income
While simple, Bach’s guidelines help ensure you stay on track for retirement.
Buy Assets That Produce Cashflow – Robert Kiyosaki’s Philosophy
Robert Kiyosaki takes a different approach that focuses less on saving from your paychecks and more on investing to create ongoing cash flow:
- Don’t believe in budgeting/cutting expenses to save more
- Wealth comes from buying income-generating assets like businesses & properties
- Keep acquiring assets until cash flow covers the desired lifestyle & spending
Kiyosaki’s methods prioritize building passive income streams to fuel spending goals now and into retirement.
Key Takeaways
- When planning for retirement, consider advice and frameworks from various experts and sources – there’s no one right way. Just focus on what works for you.
- As multiple gurus recommended, a reasonable retirement savings rate to target is 10-20% of your income.
- According to some, having 10x your annual salary saved by retirement is a good baseline goal.
- Withdrawing around 4-5% of retirement savings annually can help ensure you don’t outlive your money.
- Building passive, alternative income streams before retirement takes the pressure off traditional retirement savings.
- Cutting expenses frees up more money to save and invest, lowering the required threshold for retirement readiness.
- Approach retirement planning in a way aligned with your risk tolerance and lifestyle goals
In Summary…
While financial experts may have very different philosophies, their core advice has some common threads – save early and consistently, reduce expenses where reasonable, and utilize various income streams. Blend the principles that suit your needs.
Retirement planning ultimately comes down to understanding your spending, aligning investments to your risk tolerance, and pursuing savings strategies that will allow you to maintain your lifestyle comfortably in the long run. Use the frameworks from the financial gurus to guide your plan while still customizing it to your situation.
While the experts take differing strategies, they all offer valuable input. Each approach has merits depending on your personal retirement goals and financial situation. Take advice from each of them rather than rigidly following just one school of thought. Stay focused on your needs, and you’ll be equipped to make the right retirement savings, investment, and withdrawal decisions.