@dstark, He says 12% is the “average return” and that it is NOT the compounded return. And dollars to donuts, 95% of his listeners think that if they go to one of Mr. Ramsey’s “endorsed local providers,” they will get compounded returns of 12% per year.
@AttorneyMother , yes. I like his whole shtick. I don’t follow his book “Spend Til You Die” religiously, but it made me think. You probably know that my bedrock “how am I doing?” is his ESPlanner.com software, which assists one in smoothing consumption. As an old CS guy, I know how much went into that software.
@1214mom
I also read an earlier version of this book by Jane Bryant Quinn. Her latest edition is from 2009. I gave a copy of this book to my sibling (the one with the dynasty trust) in 1989. I don’t think I can take the credit for my sib’s success, though. 
http://www.amazon.com/Making-Most-Your-Money-Now/dp/0743269969
You might check the book out at the library first to see if it is suitable.
@IxnayBob
Kotlikoff is also the partner in the couch-potato investor advice website I posted pages ago.
^^ that I didn’t know.
^^ Correction to #5403, I can’t make that claim. He has affiliations. I don’t know if he is part of the management people. Spend Til the End co-author is one of them.
“@dstark, He says 12% is the “average return” and that it is NOT the compounded return. And dollars to donuts, 95% of his listeners think that if they go to one of Mr. Ramsey’s “endorsed local providers,” they will get compounded returns of 12% per year.”
He thinks people can plan on that because HE invests in some funds open to the public that have a long term track record that meets or beats that. However, he never says the name of the funds, so which ones the heck are they?
I’m pretty weary of listening to Dave. I’ve enjoyed listening to him for a very long time, and he has helped us in some ways. However, half the time he is either selling something, or bragging about himself. In fact as I’m listening to him, he’s selling something right now. Way too judgmental, too simplistic and linear assumptions. I understand he’s talking to the hugely in debt masses, but when you try to help someone in half a minute with just a few facts, you may not be giving them good advice at all. He even had a rant against Christians yesterday, with so much generalizing.
IxnayBob, I think. I am going to take a pass on Dave Ramsey. 
@sax, @notrichenough, @"Dad II",
Thanks for responding to my question.
For a pension which pays, say, $1000 per month, starting to collect it at the age of 62, how much would it worth if we convert it to an equivalent retirement asset as a lump sum amount? Will it be equivalent to $150,000 if the interest rate is like we have right now? Or, will it be equivalent to more, say, $200,000?
I guess we can also use the same method to convert, say, $2500 per month (for a household, the combined SS amount for a retired couple) in SS to an equivalent lump sum amount. (except that SS has the cost-of-living adjustment but many pensions do not.)
Present Value of $1000 per month for 20 years at 4% starting April 1, 2015 is $164,309.87.
In how many years will you be 62? How long will you live? There are many variables.
If you are talking about an actual lump sum payout, you will get much less than the NPV. My W just cashed out a small pension, and the amount she got was only about 75% of what she would need to turn around the next day and buy an annuity from Fidelity that would have paid the exact same amount. So keep that in mind.
I will be 62 in less than 2 years. (Sometimes I wish I am already 65 yo for the apparent reason. Can you imagine that in US, somebody would prefer to be older?! LOL.)
Have a small pension. Have some nest egg. Could get almost maximum SS if I collect it at 66 (but likely can not afford to.) Unlikely to work till 65 let alone 66. Do not plan to consider the home equity (say, $180K only) as a part of the retirement asset because we still need to live in it.
How large our retirement nest egg should be at 62 yo, if we want to claim that we have hit that $825K retirement asset target that people here have been talking about?
@notrichenough, I actually do not have the option of cashing out my pension as a lump sum payout. Several years ago, I actually started to collect a certain amount of monthly payout (like an annuity) every month. (I wish I did not. But I was panic about the solvency of that pension fund and the company so I decided to start collecting it many years ago. The pension fund has already been “sold” several times since then – I think Prudential “owns” this pension fund right now, and the company itself no longer owns that pension fund as of today. The last time I heard of it, that company itself, but not the pension fund, was bought and later sold by Google but I did not track what happened after that.)
To expand on ‘critiquing Dave Ramsey’ - when he talks about mutual fund investing, he still says he puts 25% in International. Well that won’t get him an average 12% return in current conditions!
I do like hearing the personal stories. And he does help a lot of people realize they have to save for retirement, they cannot afford credit card or school loan debt - or they have to live lean on a budget to pay off school and other debt.
He encourages too late an age for purchasing long term care insurance (age 60) - he goes by age when one may start needing it, but if medical disqualifiers happen earlier, one cannot buy. H and I bought in our 40’s; at age 52 I had bad cancer - so that would put any policy off the table. H is now on a very mild blood pressure medicine, which may have had him paying much higher premiums. Also LTC policies are getting more expensive as people are living longer and perhaps having a higher incidence of needing/using LTC. Our LTC policies give us a lot of financial security/safety net.
His staff had to chime in with him when he didn’t realize a life coordinator (or named something like that - person who is a child advocate in children’s hospital) was a ‘real job’ - a real career.
Many of his guidelines are pretty good - like how much to own in cars/recreation vehicles based on a percentage of your salary (because cars etc depreciate).
He also has some pretty respectable people who contribute to his show and talk about other things (like Dr Meg Meeker, a pediatrician who has written several books, including father/dau and parenting books), Dr Henry Cloud, etc.
Just like everything, have to evaluate what is being said, confirming with other sources.
People obviously enjoy listening to have #3 with radio listening audiences.
He definitely has found a business that works for him. I have no qualms with his religion/Evangelical Christian views or expressing them. He has a small business path that worked for him ‘starting from a card table in his living room.’
There are some caller that have serious medical tragedies or problems like income-earner dead or debilitated; Dave does soften his voice and try to convey a helpful, caring response.
He is pretty honest too - talking about his personal bankruptcy. Crying in the shower. How strongly he felt when wife Sharon was getting collection calls where the caller talked badly to her. The reason he has such strong convictions is how he was personally embarrassed to the core for his leveraged loans getting called in and ultimately causing him bankruptcy in California.
To add to the list of things that irritate me, telling some callers that they might have to pay “gift tax” if they give their kids too much money, without explaining what he means (if he even knows what he means), ripping people apart for wasting their money on private schools, especially if they don’t get what he considers a valuable degree, putting people down for helping their kids out (while in the next segment he promotes his daughter’s financial book). I don’t mind him talking about his Christian values, though I’m agnostic, but it irritates me when he puts down people with different political points of view (though I’m closer to his viewpoint). What does that have to do with money and paying off debt, anyways? Such condescension for people who think differently.
I think I need to turn off the radio.
We occasionally see this is happening on CC as well.
Helping your kids out and funding your own retirement are related. Some may argue that unless the kids can be financially independent eventually, they could become your headache in your retirement years.
I am fully aware that some parents firmly believe their kids should be able to pull themselves up without much of their help. This is because these parents did the same when they were college age. If their kids really can manage to do that, good for these parents.
Thanks to all for the congrats on retirement. It’s exhilarating and terrifying at the same time.
I don’t listen to any of these guys on TV/radio. They give me a headache. Loud, yelling snake oil salesmen of the 21st century. Just a fancier soap box.
2:30 am ramblings…
What has me worried about retirement are the unknowns. Those things out of our control. It’s hard to plan when nothing is really ever guaranteed.
Promised Pension…can change
Promised Health care…can change. 6 yrs til medicare.
Social security…can change
Assets…can change with stock market even though we are conservative…which has hurt us these last few years,
So we just trudge forward and hope for the best. Hedge our bets.
I worry. Yet, we are in so much better shape than most people. Can’t be happy if you are worried all the time. So stop. I can live very small and still be very,very happy.
So, in we jump. both feet! Have some fun. Take a long cold drink of water and laugh.
Mcat, I will always have room for my adult kids to land if needed. As long as I’m able they will have a roof over their heads, food to eat and a warm embrace. Anything more than that is on them. That is more than most have and they know it.
And yes, if I can afford it, I will help them with money. But they do not expect it. They need to be resilient and self sufficient. It is such an important skill.
^ I agree with you on what you wrote in your last two paragraghs. There is indeed a point that the financial cord needs to be cut as no one likes to have an offspring who can not be independent of us eventually (We will most likely leave this world before they will after all.) When and how much to cut the cord is an “art” every parent need to figure out by him/herself.
Congrats for your retirement!
If we had guaranteed healthcare until 65 we’d both retire in a heartbeat. Thats a benefit long gone to most. Those who have it should count their blessings.
I am all for people taking financial responsibility and getting their financial house in order, but IMO Dave Ramsey is a one trick pony who promotes his talks for which he gets paid nicely. If he is so into helping others with their financial issues, maybe his touring talks and classes should be free … Just a thought.
Where I live many of the school crossing guards are in that between stage for healthcare - too young for medicare but ready to retire from full-time work with health insurance. So I learned that while the hours (10-15 per week) and pay (around $10-$15/hour) aren’t great, the positions come with very inexpensive healthcare. The catch is getting up early without fail and then returning 6 hours later and standing outside in weather ranging from 25 below windchill to 90 plus with humidity and everything in between.