Dave Ramsey has long argued that retirees with savings in stocks can withdraw 8% a year. His company puts that figure in writing: An example in its guide to how much you need to retire uses an 8% withdrawal rate and assumes an 11% average annual return.
Morningstar’s research lands on a very different number. Its 2025 State of Retirement Income report, released in December 2025, puts the highest safe starting withdrawal rate at 3.9% for people retiring in 2026 who want steady, inflation-adjusted income.
On a $1 million portfolio, that is the difference between taking $80,000 or $39,000 in the first year.
Why the 2 numbers are so far apart
Ramsey’s math leans on the stock market’s long-run record. The Ramsey Solutions guide says the S&P 500 has historically averaged 10% to 12% annually. If returns arrive at that pace, an 8% withdrawal still leaves room for growth.
Morningstar asks a narrower question. Its 3.9% figure assumes a portfolio with 30% to 50% in stocks, a 30-year retirement and a 90% probability that the money lasts. It also leaves out Social Security and other income outside the portfolio.
A heavier stock allocation raises expected returns, but it also makes the ride rougher. An average return says nothing about the order in which good and bad years show up, and for someone living off a portfolio, the order can matter more than the average.
The first bad year does the most damage
Take a hypothetical retiree with $1 million who withdraws $80,000 at the start of the year, and then watches the remaining $920,000 fall 20%. The balance drops to $736,000. Taking another $80,000 the next year means withdrawing nearly 11% of what is left.
Run the same downturn at 3.9%. After a $39,000 withdrawal and a 20% decline, the balance is $768,800, and the next $39,000 is about 5% of it. Neither retiree controls the market, but only one is selling a large slice of beaten-down investments to pay the bills.
That is the risk early in retirement, when a portfolio has the most years left to cover. A few strong years after the downturn may not repair damage that compounds while withdrawals continue.
Ways to spend more without betting on averages
A higher number is not off the table. Morningstar found that retirees willing to let their spending rise and fall with the market could start at nearly 6%. Cutting back in down years buys that extra room, and the methods that support the highest starting rates can mean sizable year-to-year swings in spending.
Two other moves can ease the pressure on a portfolio. Each year you delay Social Security past full retirement age increases your benefit by 8% until 70, which can reduce how much your savings need to cover.
Holding a year or two of planned withdrawals in cash, such as a savings account or CD, can let you avoid selling stocks after a drop.
Spending assumptions also deserve a hard look before you settle on a number, particularly how long your money may need to last. A plan that holds up for 20 years can look very different over 30.
Putting your own number to the test
Neither 8% nor 3.9% was built for your mix of accounts, taxes and Social Security, and claims like how much a couple can safely spend depend on details a rule of thumb skips. A fiduciary advisor can stress-test a withdrawal plan against bad early years and map out which accounts to tap first.
If you have $100,000 or more invested, SmartAsset can match you with up to three fiduciary advisors, who are legally required to put your interests first. The free questionnaire takes about 10 minutes, asks for a phone number near the end, and lets you decide whether and when to respond.
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