Dave Ramsey, one of the loudest voices in personal finance, built the bulk of his wealth through real estate and later through his career in personal finance media. Now at age 65, much of his advice—which he dispenses on his video/audio podcast The Ramsey Show—focuses on retirement.
While many financially minded younger people prefer to think of retirement as a far-off eventuality, the truth is that the best way to prepare for it is to start early. Even students and people just beginning their careers can benefit greatly by taking a few simple steps to set themselves up for success decades down the line.
Here, we’ve collected and distilled five of Dave Ramsey’s best pieces of retirement advice that anyone can benefit from, whether they plan to retire in 10 years or 40.
But first, who is Dave Ramsey, and why should you listen to financial advice from a controversial evangelical talking head with a bankruptcy in his past?
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Who is Dave Ramsey & why is he considered a retirement expert?
Like most public figures, Dave Ramsey has received some criticism over the years, but he’s also built a massive following through his books, podcasts, and other media efforts. Some of the main criticisms leveled at Ramsey point out that some of his financial advice is broad, lacks nuance, and fails to take individual circumstances into account.
Others fault him for incorporating his Christian religion into his financial discourse and assuming his listeners all have (or are trying to build) a traditional nuclear family — i.e., a spouse, a mortgage, and several college-bound children.
And while these criticisms are perfectly valid, they are most relevant to Ramsey’s advice on things like saving, spending, debt, and credit cards. Retirement, like real estate, is one of Ramsey’s specialties, and whether you love him or hate him, following his advice on the subject could help you build and nurture a post-career nest egg that your older self will thank you for.
Related: Dave Ramsey’s net worth: The retirement expert’s wealth in 2025
Dave Ramsey’s 5 most important retirement insights
Here are five of Ramsey’s most poignant pieces of advice when it comes to retirement planning. These are points he touches on again and again, both in his books and when giving advice to listeners who call into his shows.
1. Don’t plan to rely on Social Security
One of Ramsey’s most frequent warnings on retirement is to not depend fully on Social Security for retirement income.
What is Social Security & how does it work?
Social security is a publicly funded retirement income safety net for American workers. It’s been around for over 90 years, and it’s something a lot of working-class retirees rely on each month to make ends meet. Every worker pays into it via income tax, so current workers’ Social Security tax payments fund current retirees’ monthly Social Security income payments.
Why Ramsey says don’t count on it
It’s a good system, but it has its limitations, as Dave Ramsey is quick to point out. First, Social Security payments aren’t huge. They vary depending on how much a retiree made during their career (calculated based on their 35 highest-earning working years) and when they choose to begin receiving benefits. “The earlier you start taking benefits, the less money you’ll get each month,” in Ramsey’s words.
Those with higher career income and those who choose to retire and start receiving benefits later are eligible for higher monthly payments. That being said, for most retirees, Social Security payments aren’t enough to live on — at least not comfortably. Ramsey, “The average post-retirement Social Security payout [is] barely enough to live above the national poverty level for a two-person household.”
Ramsey explains that these benefits were not designed to fund retirement. Rather, they were designed to supplement income from retirement accounts like 401(k)s and IRAs.
The second reason Ramsey cautions eventual retirees about Social Security income is that it may not be guaranteed. Because it’s funded by current workers, the amount of money in the program’s trust fund is finite and subject to change depending on how many active workers are paying into it.
With so many Baby Boomers reaching retirement age, current estimates posit that the program may only remain fully funded until 2034 unless some sort of corrective action is taken. That means that those who plan to retire after that may not receive the full amount of Social Security income they are eligible for. The way Ramsey puts it, “in its current state, the Social Security system is a mess — and you shouldn’t count on an inept government to fix it.”
Related: Suze Orman’s 5 best saving & spending tips
2. If your employer offers a 401(k), invest the maximum that they will match
“Your workplace 401(k) is the foundation of a solid retirement plan,” Ramsey assures his readers. When it comes to employer-sponsored retirement accounts, he constantly urges his audience to contribute at least the maximum amount their employer will match. That’s often around 3% percent of each paycheck, although certain employers match contributions at much higher rates, like Apple (6%) and Boeing (10%).
How does 401(k) matching work?
If an employer offers workers a 401(k) contribution match, that means that the company will deposit the same amount of money the employee does into their retirement account up to a certain percentage of each paycheck.
So, if a worker makes $2,500 per month, and their employer offers a 4% match, that means the employee can elect to divert $100 (which is 4% of $2,500) into their 401(k) each month, and their employer will provide an additional $100, doubling their contribution. Over the course of a year, that essentially translates into $1,200 in extra pay.
Why Ramsey encourages it
Ramsey is quick to point out the obvious. Employer 401(k) matching is literally free money. The way he puts it, “If your employer matches your contributions (and most do), you get an instant 100% return on part of the money you invest in your 401(k). That’s free money. Take it!”
In other words, contributing at least the amount of money your employer will match is a no-brainer, even if it means slightly lowering the amount you get to take home and spend each month. Your retired self will thank you.
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3. Supplement your 401(k) with a Roth IRA
401(k)s are an excellent retirement savings tool, and Ramsey, as previously mentioned, has always advocated for contributing the maximum amount your employer will match each month. That being said, Ramsey also points out that 401(k)s have several drawbacks, which is why he recommends pairing them with a Roth IRA.
Limitations of traditional 401(k)s
- Not all workplaces offer 401(k) accounts. That means that for many workers, no employer-sponsored retirement account is available.
- 401(k) accounts have annual deposit limits. In 2025, this limit is $23,500 (although older workers are allowed to make additional “catch-up” contributions). This means that higher earners may not be able to put as much money as they’d like into their retirement account.
- Most workplace 401(k)s are traditional (as opposed to Roth) 401(k)s. This means that the money you and your employer put in is pre-tax, which can be advantageous in the short term because it lowers your taxable income for the year. On the other hand, you have to pay taxes on this money (which will have grown substantially) later on when you withdraw it during retirement.
What is an IRA?
IRAs, or individual retirement accounts, are similar to 401(k)s, except that anyone with earned income can open one. For this reason, they are popular with individuals whose employers don’t offer a 401(k). IRAs can be traditional, meaning you contribute to them using pre-tax dollars and then get taxed on your withdrawals during retirement, or Roth, meaning you contribute to them using post-tax dollars but get to withdraw your money tax-free during retirement.
Why Ramsey recommends opening a Roth IRA
- Roth IRAs allow you to pay tax on your deposits before you add them to your account, so you don’t have to deal with taxes on your withdrawals during retirement. This means that any capital gains, dividends, and interest your Roth IRA investments make will never be taxed.
- Roth IRAs have a $7,000 contribution limit in 2025, so when paired with a 401(k), this ups your total annual retirement plan contribution limit to $30,500.
- Some 401(k) plans may only offer a few different mutual funds to choose from, while IRAs allow their owners to choose from a wider variety of investment options.
By using both types of retirement accounts, you can take advantage of your employer’s matching contributions, the future tax benefits of the Roth IRA, and the increased contribution limit afforded by having two retirement accounts.
In Ramsey’s words,” the best-case scenario is that you invest in both accounts (and if you can max them both out—knock yourself out).”
Related: Scott Galloway’s 5 best wealth-building tips for young people
4. Invest in mutual funds
Ramsey, like most retirement experts, does not recommend using your retirement accounts to invest in individual stocks. Your retirement account is going to be around for a while, and the best way to grow your money while mitigating risk is to diversify your investments.
The easiest way to do that is by investing in mutual funds or ETFs, Ramsey’s favorite long-term investment vehicles. These are professionally curated baskets of stocks that allow you to invest in dozens or hundreds of stocks with each contribution.
By spreading your money out this way, you reduce the influence each company’s stock price has on your portfolio. That way, if one company goes under and its stock drops to zero, your savings won’t be heavily impacted.
What types of mutual funds does Ramsey recommend investing in?
Ramsey’s go-to mutual fund investment strategy involved dividing your money between four different types of funds:
- Large-cap growth and income funds: These mutual funds primarily invest in large, established companies, sometimes called “blue-chip” stocks—think Walmart, Pepsi, Apple, and GE. These companies often pay dividends (quarterly payments disbursed to shareholders out of the company’s profits), and they’re usually relatively low risk over the long term because they are very established in terms of market share, infrastructure, and consumer sentiment.
- Mid-cap growth funds: These funds invest in mid-sized companies that still have plenty of runway for growth. They may not pay dividends yet, but they have more upside potential than more mature, blue-chip companies. That being said, they’re established enough that their risk of total failure is relatively low.
- Small-cap aggressive growth funds: These sorts of funds invest in promising, younger companies, many of which may not even have turned a profit yet. The stocks in these funds are likely to be highly volatile, meaning their prices can rise and fall dramatically over relatively short periods. These funds are riskier than the other types Ramsey recommends, but they also have by far the most growth potential over the long term.
- Foreign equity funds: The final fund category Ramsey recommends is international. By investing in a basket of foreign companies from around the world, you further diversify your portfolio by exposing it to other stock markets and protect it somewhat from market downturns in the U.S.
Ramsey recommends this diversified approach to retirement investing because, as he says, “nobody can time the market or predict the future.” That’s why investing in a broad array of stocks via mutual funds and ETFs is the best way for a passive investor to watch their retirement fund grow steadily over time.
More on Dave Ramsey:
- Dave Ramsey sounds alarm on major money mistake to avoid
- Dave Ramsey has blunt words for Americans about Social Security
- Dave Ramsey warns Americans about one big Social Security fact
5. Contribute 15% of your income to your retirement
The last tip on this list is the trickiest for most working people. After all, the cost of living is higher than ever, and many Americans have a difficult time making ends meet on a weekly basis, let alone setting aside money for the future.
Nevertheless, Ramsey ardently urges his audience to allocate 15% of their monthly income toward their retirement (or as much as they possibly can up to that amount).
The way he views it, 15% is small enough to leave enough wiggle room for other expenses and financial goals, but large enough that it can turn into a large nest egg—something he says retirees need, as their expenses are often higher than expected.
According to Ramsey, “estimates show that a 65-year-old couple will need about $315,000 for health care costs in retirement. And that doesn’t even include any long-term care costs, which can run an average of around $108,400 a year in a nursing home or $54,000 a year for assisted living.”
One caveat here, though, is that Ramsey recommends holding off on investing until you’re debt-free (aside from a mortgage) and have a small emergency fund. Once that is the case, though, he advises living below your means so that you can keep up with his 15% a month recommendation.
Related: Suze Orman’s net worth in 2025: The personal finance icon’s wealth
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