Retirement Retirement Planning

Dave Ramsey Calls Out the 401(k) Excuse He Hears All the Time

And he doesn't mince words.

By Catherine Collins

Edited by Laura Hohenstein

Updated March 3, 2026

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Dave Ramsey recently went on a rant about Americans and their retirement plans on the Dave Ramsey Show. Ramsey is known for these rants and tough-love advice. In true Ramsey style, he spoke about personal responsibility.

In the clip, Ramsey tells his listeners that if they are currently under 40 years old and aren't millionaires by the time they retire, it's their own fault. He goes on to explain that no one who lives in America has an excuse not to retire a millionaire. He says that, given high lifetime earnings and the power of compound interest, everyone has the opportunity to retire comfortably.

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The importance of being debt-free

Ramsey's teachings center on becoming debt-free, building wealth, and being generous. He is adamantly against debt, with the exception of mortgages. In his books and on his show, he frequently encourages his followers to take responsibility for their debt and to pay it off, starting from the smallest amount of debt to the largest.

Ramsey doesn't even want his listeners to invest in a 401(k) until all their consumer debt, including student loans and medical bills, is paid off. Many people don't invest up to the maximum because they do not have enough cash flow. Paying off debt can help free up enough cash to invest in retirement accounts.

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Build an emergency fund first

Once you have a 401(k), the goal is to add to your nest egg and allow it to grow until it's time for retirement. Taking money out in the form of 401(k)s loans can negatively impact your account's growth. That's why Ramsey recommends people have a 3 - 6 month emergency fund before maxing out their 401(k) contributions.

Having an emergency fund can also help pay for unexpected expenses and surprises that could be used as excuses or reasons for not investing more in retirement.

Understanding 401(k) fees

Ramsey explains that it's also people's responsibility to learn about their investment options and the fees that go along with them. That means researching the assets your 401(k) plan provides, understanding the fees you're paying, and taking the time to ask a financial advisor questions if you have them.

Ramsey cautions against investing in expensive products, like annuities, that come with significant fees and commissions. Again, Ramsey is a huge proponent of personal responsibility and believes that people should take the time to understand their retirement accounts and create goals for their future.

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Consistency wins

Just as Ramsey calls out people for making excuses about retirement savings, he also highlights some of the biggest retirement mistakes Americans make. One of them is trying to time the market. He says people should consistently invest in retirement accounts.

When the market is volatile, Ramsey explains that people jump in and out of their investments, which can lead to losses. Additionally, it can be incredibly stressful.

401(k)s vs. Roth IRAs

Although Ramsey believes people should take advantage of work benefits, like employer matching, he actually prefers Roth IRA accounts. That's because people who meet certain requirements can withdraw money tax-free during retirement.

Additionally, unlike 401(k)s, Roth IRAs do not have required minimum distributions. That means your investments can grow as long as you like, and you don't have to take a withdrawal if you don't want to or need to.

Why you should have multiple accounts

Ramsey encourages people to have 401(k)s and Roth IRAs to make sure to invest the maximum amount allowed in tax-advantaged accounts. He says people should first invest enough to get the 401(k) match, then max out a Roth IRA. Then, if they have money left over to go back and add more to their 401(k) retirement plan until they're contributing 15% of their income towards retirement.

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Why Ramsey's direct approach works

Although some people don't like Ramsey's no-nonsense advice, millions of other people do. During turbulent times when there is significant economic uncertainty, many people appreciate having direct and practical steps to take.

Ramsey provides this by teaching his 7 Baby Steps framework, publishing books, hosting his radio show, and going on speaking tours across the country. Many people who follow his advice participate in "Debt-Free Screams" on the show, which inspires other listeners to stick to the plan and take control of their budget and their futures.

Bottom line

Ramsey is a huge proponent of taking action when it comes to personal finance. He encourages people to put in hard work, learn how to budget, and to pay off debt. He wants people to focus on monthly-cash flow and find ways to contribute to a retirement account. He challenges people's excuses and recommends that people take responsibility for their financial futures so they can enjoy a stress-free retirement.

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