Dave Ramsey Says Stop Retirement Contributions To Kill Debt — Here's Why That's Not One-Size-Fits-All Advice
If there’s one thing Dave Ramsey really hates, it’s debt. Over the years, his advice has helped many people get out of debt and start building a better financial future. However, critics say he prioritizes getting out of debt so intensely that he bucks conventional wisdom about other goals, like retirement savings.
For instance, Ramsey believes that if you’re stuck in debt, you should pause all retirement savings until you’re out of debt — even if it means not taking advantage of your employer’s 401(k) match.
Check Out: I’m a Financial Advisor: Here’s How Often You Should Check Your Retirement Account Balance
Learn How: Start Growing Your Net Worth With Smarter Tracking
While Ramsey has insisted that you can’t really build wealth while paying interest on debt, particularly consumer debt, some experts and everyday people alike say that his advice isn’t right for everyone. In some cases, they argue, it’s the wrong choice.
You Could Miss Out on Prime Investing Years
For other experts like Suze Orman, your 401(k) is such an important financial resource for retirement that you should not stop contributing even if you're also working on a debt repayment plan. In a post on LinkedIn, Orman advised readers to aim to save at least 10% of their salary in a 401(k) — and ideally 15% — through a combination of their own contributions and any employer match.
"If you’re not yet at 10% or 15%, boost your contribution rate by at least 1 percentage point right now," she wrote.
Some everyday investors echo that perspective. When one Redditor in the r/DaveRamsey subreddit asked their peers for opinions about easing up on retirement savings to focus entirely on student loan debt, even some Ramsey fans questioned the practicality of the move.
Another Redditor flatly called it a “horrible” choice, encouraging the original poster to keep prioritizing retirement and investing.
“Not everything has to be such an extreme,” they said. “Investing is the most important thing to do in your 20s and 30s to take advantage of compound interest.”
Remember the old financial chestnut that “it’s not timing the market, but time in the market that matters”? When you’re not contributing to your 401(k), you’re missing that time in the market.
In a piece for Investopedia critiquing Ramsey’s views about pausing 401(k) contributions while in debt, writer Adam Hayes summarized the issue this way:
“Two missed years in your 30s could mean tens of thousands less at retirement,” Hayes wrote.
You Could Miss Tax Benefits
Ramsey’s laser-like focus on getting out of debt has helped many people change their behaviors and become more cautious about spending and saving. But it doesn’t account for one of the biggest downsides of pausing retirement contributions: losing out on immediate and long-term tax advantages.
Traditional 401(k) contributions are made pre-tax, which reduces your taxable income in the year you contribute. That means you may owe less in federal — and sometimes state — income taxes. In some instances, you could even fall into a lower tax bracket.
Don’t forget that money inside a traditional 401(k) grows tax-deferred, so you’re not paying taxes on dividends, interest or capital gains every year. Over time, you could benefit from faster compounding since you’re keeping your full balance invested.
When you pause contributions, you limit your ability to take full advantage of decades of compounding while also reducing the amount benefiting from long-term, tax-advantaged growth.
The choice to pause or continue retirement contributions can be more complex than Ramsey makes it out to be.
Not Taking Advantage of Employer Matches Is Like Leaving Free Money on the Table
Hayes also questioned Ramsey’s insistence that, in some cases, people should forgo an employer match as part of pausing overall 401(k) contributions. Though Ramsey may regard the choice as cracking a few eggs to make the overall omelet of debt reduction, Hayes described it as giving up free money.
“Employer matches are real compensation, typically around 4% to 5% of salary,” Hayes wrote.
Suze Orman agrees, calling the employer match "free money" in a post on Facebook.
"It’s one of the easiest, smartest ways to boost your retirement savings," she wrote. "And too many people skip it because they think they can’t afford to contribute."
Orman's opinion? You can't afford not to contribute.
In another thread on the r/DaveRamsey subreddit, Redditors told a member who expressed concern about pausing her 401(k) contributions for a year that she’d be wise to keep contributing up to her employer match.
Another Redditor pointed out that Ramsey’s advice wasn’t fully applicable to this woman’s situation, given that the interest rate on her $100,000 student loan was a relatively low 2.9%.
“If you actually run the numbers, you will see that taking your 401(k) match and investing at ~8% will yield hundreds of thousands more dollars for you a few decades down the line than if you pause retirement and aggressively pay down a 2.9% loan,” they wrote.
This Redditor ended their advice with an earnest plea to their peer to “please, please, please talk to an actual fiduciary” instead of relying on generalized advice that may not account for their personal situation.
There’s a Middle Path
Hayes reminded readers that it’s possible to balance two important financial goals — paying down high-interest debt and saving for retirement — at the same time.
Much of the advice he compiled from other experts echoes a middle-ground approach: contribute enough to your 401(k) to get the employer match, then focus on tackling debt through either the snowball or avalanche method — whichever works best for you.
As you pay down more high-interest debt, you can increase your retirement deferrals.
It’s a moderate path that may be more manageable for many people.
The Bottom Line
Ramsey isn’t wrong to suggest that high-interest debt is a serious matter and should be paid down aggressively. However, his suggestion that people pause retirement contributions to do so isn’t always the best course of action for everyone.
Summer spending adds up fast. Enter MoneyLion's Summer Break Giveaway for a chance to win $500 — and give your budget a break. (No pur. nec. Ends 7/4/26. See official rules at mlion.info/summerbreakofficialrules)
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion: