George Kamel: “Sometimes the Riskiest Thing You Can Do Is Stay Too Conservative in Your Investing”

A 55-year-old listener with about $1.8 million saved asked The Ramsey Show when she should start trading growth for safety. Ramsey personality George Kamel answered on the October 22 episode, “Don’t Let Shame Keep You Stuck”: “Sometimes the riskiest thing you can do is stay too conservative in your investing.”

The listener, identified on air as Sydney in New York, plans to retire in four and a half years. She holds about $1 million in her company 401(k) and another $800,000 in other accounts. Her 401(k) is invested aggressively and has averaged roughly 10-11% a year.

Her question gets right to the tradeoff: “At what point should I begin shifting some of that money into more conservative, lower-risk investments, knowing that it will likely mean lower returns?”

A lot rides on the answer. As the hosts noted, retirement can last 25, 30 years. If you shift too much into low-yield accounts, the money can run out while you still need it.

Kamel Gets the Destination Right but Skips the Riskiest Five Years

Kamel’s core point is correct. Inflation quietly shrinks what every dollar buys, even while your statement balance looks steady. The Consumer Price Index hit 336.3 in September, its highest reading of the past year. Social Security’s 2027 cost-of-living adjustment is 3.6%. That increase helps offset the price hikes retirees have already faced.

Compare that with what “safe” money earns. On average, a 12-month CD pays 1.8%. Leave money there, and it loses purchasing power every year.

Here is how that plays out for Sydney. Assume she withdraws 4% in year one, or $72,000, then increases withdrawals 3% a year to keep pace with prices (an example inflation rate).

By year 25, she would need about $151,000 to buy what $72,000 buys today. Assuming the same return every year, here is how long her money lasts:

If she retires at 60 and holds only CDs, she runs out of money in her early 80s. That is the risk Kamel is describing.

The conservative side has a fair case right now. The 10-year Treasury yields 5.1%, up from 4% earlier this year. With yields that high, bonds can carry a 30-year retirement.

The catch is that a locked-in yield never rises with prices. If inflation runs 4% instead of 3%, the same plan falls short of 30 years.

Your Withdrawal Timeline Decides Whether Growth Helps or Hurts

The deciding factor is when you will sell. Stocks you won’t touch for a decade have time to recover from a crash. Money you need to spend in the next five years has no such buffer.

Say Sydney keeps everything in stocks and the market drops 30% (an example figure) the year she retires. Her portfolio falls to $1.26 million. Her $72,000 withdrawal now eats up 6% of the account. Worse, she has to sell shares at low prices, which turns a temporary decline into a permanent loss. Planners call this sequence-of-returns risk, and a bad market in year one does far more lasting damage than one in year fifteen (we mapped out how to protect those early years in a free guide: The First Five Years).

Now say she holds five years of spending, or $360,000, in cash, CDs, and short-term Treasuries. That portion is 20% of her money. During that same crash, she lives off the portion and sells no stock. The rest stays invested for growth, just as Kamel wants.

Run These Numbers Before Your Last Paycheck

1. Find your income gap. Add up what you will spend each year. Then subtract your benefit estimate from your my Social Security account at SSA.gov. For comparison, the average retired worker will collect about $2,170 a month in 2027. Your portfolio has to cover whatever is left.
2. Calculate your withdrawal rate. Divide that annual gap by your total savings. The higher the percentage, the less room you have to face a bad first few years.
3. Build a three-to-five-year cash bucket. Start one to two years before you retire. Shop well past the 1.8% national average. Top online banks routinely pay 3-5x that rate.
4. Understand how the rest of the plan works. In a portion approach, everything else stays in diversified growth funds. After strong market years, some profits refill the portion. After weak years, the portion covers spending while stocks have time to recover.

The plan that holds up keeps only the next few years of spending safe and leaves the rest in investments that can outgrow a retirement lasting three decades.

Contact [email protected] for any questions or corrections.