Newport Beach, Calif. ó Note to Dave Ramsey, stop digging when you are in a hole. At least two of my financial acquaintances found themselves in Twitter battles with Mr. Ramsey. When you donít have enough ammunition retreat is your best option. Instead of withdrawing, he doubled down. But on a slow news day he is the gift that never stops giving.  

For a little background, go to If you can get through the cornucopia of products available for sale, trust me the aisles are well-stocked, you will find Daveís ďThe 12% Reality.Ē  He gets his numbers from the S&P 500ís historical average rate of return and thatís where the wheels fall off. You can have your own opinion but you canít have your own facts. Using Ramseyís retirement advice sets up failure.

Either everyone else in the retirement planning world is wrong or Dave is.  Using the average rate of return misleads people. If an investment earns 100 percent in year one and loses 50 percent in year two, it averages 25 percent but thatís not what an investor gets.  In recent video on, Dave melts down with some truly outlandish claims by alluding to 12 percent (or higher) returns from funds with seventy year track records. He doesnít mention any because none exist. Watch the video and pay special attention to the helmet in the background, spoiler alert, orange T.

Compounding things Dave uses his 12 percent golden rule as basis for eight percent retirement withdrawal rates. No one else can replicate anything near eight percent. Following his advice, Ramsey retirement acolytes may spend too much during retirement.  Plus expecting twelve percent can lead to unwarranted risk with your portfolio. The coup de grace is the Ramsey network of Endorsed Local Providers selling mutual funds with high expense ratios/commissions. 

Many praise Ramsey for stressing debt reduction and increasing retirement savings. But címon, thatís low hanging fruit.  Debt is not the work of the devil. With long-term mortgage rates hovering around 4 percent a home loan is not a bad idea. Paying off a mortgage early is a personal choice. Depending on your particular situation, time horizon and risk tolerance one might choose to keep a mortgage while another may make a different choice and neither is wrong. Borrowing money for student loans or to expand your business are examples of how credit works for you. To Dave, all debt is bad.

When I am wrong I change my mind. Fifteen years ago I thought Social Security would go bankrupt, it wonít. Worst case scenario benefits will be cut but they wonít go to zero in your lifetime. At one time I ignored how volatility affects a portfolioís growth and can hinder viability during retirement. I donít anymore.  An important part of the financial planning process is evaluating your plan and making necessary changes. Financial planning is not always black and white.

Even though Buz Livingston is a fee-only Certified Financial Planner this should not be considered personal advice.  For specific recommendations visit us online at or at our new office in Redfish Village, 2050 Scenic 30A, M-1 Unit 230.  Follow us on Twitter @BuzLivingston.