There’s very little I agree with Dave Ramsey on, especially Roth Conversions. In this video, I analyze what Dave Ramsey has stated regarding Roth Conversions and how many details he is excluding that costs people hundreds of thousands of dollars.
0:00 Intro
0:45 Tax Brackets
3:50 Paying Taxes on Roth Conversions
6:25 The Five-Year Rule
8:09 Summary of Dave Ramsey Roth Conversion Statements
9:12 Conclusion
💰FREE Tax-Free Toolkit:
✅ Find a Power of Zero Advisor:
➡️ Learn How To Become a Power of Zero Advisor:
✔️ Listen to the Podcast –
🔹 Connect With Us 🔹
Twitter -@mcknightandco
#taxfreeretirement…(read more)
LEARN MORE ABOUT: IRA Accounts
TRANSFER IRA TO GOLD: Gold IRA Account
TRANSFER IRA TO SILVER: Silver IRA Account
REVEALED: Best Gold Backed IRA
Dave Ramsey, a renowned financial expert, has often been hailed as a reliable source for financial advice. However, his views on Roth conversions are dangerously misguided. While Ramsey offers some sound advice on budgeting and saving money, his outlook on Roth conversions can lead individuals astray and potentially harm their long-term financial goals.
Ramsey advocates for the traditional IRA over the Roth IRA, stating that individuals should focus on lowering their taxes in the present rather than in the future. He believes that by paying taxes upfront with a Roth conversion, individuals miss out on the opportunity to invest that money and potentially earn a higher return. However, this narrow perspective ignores the numerous benefits provided by Roth conversions.
One of the biggest advantages of Roth conversions is the tax-free growth they offer. Unlike traditional IRAs, Roth conversions allow individuals to contribute after-tax dollars, meaning that when it comes time to withdraw the funds, there will be no tax liability. With a traditional IRA, individuals are required to pay taxes on the funds they withdraw during retirement, potentially eroding a significant portion of their savings.
Another critical factor to consider is that future tax rates are highly uncertain. Ramsey’s argument that individuals should focus on current tax savings is based on the assumption that tax rates will remain constant or decrease in the future. However, there is no guarantee that this will be the case. In fact, many experts predict that taxes will increase in the coming years to address mounting government debt and other economic factors. By converting to a Roth IRA, individuals can hedge against potential future tax hikes and secure tax-free withdrawals in retirement.
Additionally, Roth conversions offer greater flexibility and control over one’s finances. With a traditional IRA, individuals are required to begin taking required minimum distributions (RMDs) at the age of 72. These distributions are subject to taxation and can disrupt long-term financial plans. In contrast, Roth IRAs have no RMDs during the account owner’s lifetime, allowing for greater control over when and how funds are withdrawn.
Lastly, Roth conversions can provide significant estate planning benefits. Unlike traditional IRAs, Roth IRAs do not require beneficiaries to pay taxes on inherited funds. This can be a substantial advantage for those looking to pass on their wealth to future generations.
It is crucial to recognize the limitations of Ramsey’s perspective. While he promotes the idea of saving money in the present, his approach fails to account for the tax advantages, flexibility, and control that Roth conversions offer in the long run. By disregarding these crucial benefits, individuals may miss out on significant opportunities to optimize their retirement savings.
In conclusion, Dave Ramsey’s advice on Roth conversions is flawed and can prove detrimental to individuals’ financial future. It is essential to consider all aspects of Roth conversions, including tax-free growth, protection against potential tax increases, flexibility, control, and estate planning benefits. By exploring the full spectrum of options and consulting with qualified financial advisors, individuals can make informed decisions that align with their unique financial goals and aspirations.
So many of his listeners ran out of money years in advance of life expectancy? Could you share where you got the data of this claim? I did read two of your books so I am curious, were you an insurance salesman previously? Also, interesting that I just started looking at your channel, and I’ve already seen you trash three well-known people. To each their own, but you might get a bigger following if you would just stick to your own content.
Great job Dave
I came across Garrett Gunderson and his book "Killing Sacred Cows" and it started my mindset transition. One of the biggest differences between financially successful and unsuccessful is how they think about money and wealth.
Dave Ramsey teaches a budgeting "shrink your way to wealth" mindset vs an abundance creating more value mindset.
Ramsey is a charlatan, at best, and pathological liar and psychopath, at worst. His advice is only helpful for people addicted to spending on credit cards. Its usefulness stops there, and stops hard. I'm not better off now that I've broken my back working and paying off all my debt, bought a house with cash, and drive twenty to thirty year old cars. My life is magically better. All of these supposed "build wealth really really fast" promises ring false when you're actually in weeds trying to do it yourself. He pushes traditional evangelical family building values not realizing dating is dead and marriage is now a thing of the past thanks to women. I feel absolutely had by his scheming ways and slick tongue after following his show for over five years. I hate him.
That's fortunately what he's allow to get away with.
Only one question Dave, with all the crushing regulation we advisors have to function under and the consequences of even minor errors being fairly severe, where is the accountability for Dave Ramsey when his followers are damaged by his advice?