How much does Dave Ramsey say to put into a 401k?
Asked by: Xander Gutmann | Last update: February 17, 2026Score: 4.3/5 (75 votes)
Dave Ramsey recommends investing 15% of your gross income for retirement in accounts like your 401(k) and Roth IRA, prioritizing the company match first (it's free money!), then Roth IRAs, and then back to your 401(k) if needed, after becoming debt-free and fully funding your emergency fund. The goal is to reach 15% total contribution across all retirement accounts, not just the 401(k).
How much should I contribute to my 401k with Dave Ramsey?
That's why we recommend saving 15% for retirement when you're ready to start investing. You need to keep some room in your budget for other important financial goals, like saving for your kids' college fund (Baby Step 5) and paying off your house early (Baby Step 6).
Is contributing 20% to a 401k too much?
Contributing 20% to your 401(k) is generally excellent, often recommended as a strong goal (along with 15%) for robust retirement savings, especially if your employer offers a match; however, it's only "too much" if it prevents you from covering essential expenses, building an emergency fund, paying high-interest debt, or saving for other short-term goals. It's a balance: save aggressively if you can, but prioritize needs and goals like getting the full company match first.
What does Dave Ramsey say about 401ks?
Dave Ramsey says a 401(k) is a great place to begin retirement savings. Ramsey is clear: A 401(k) is a smart way to approach saving for retirement. “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),” Ramsey wrote. “That's free money ...
What is the Dave Ramsey 4% rule?
Ramsey states that beating the market is easy with his asset allocation. You get 12% per year, take out 8%, and leave 4% to keep compounding.
How Much Should I Be Putting Into My 401(k)?
Can I retire at 62 with $400,000 in 401k?
Yes, you can retire at 62 with $400,000 in a 401(k), but it's tight and highly depends on your spending, lifestyle, investment mix, and other income like Social Security; it might be sufficient for modest living with careful planning, but working a few more years or drastically cutting expenses offers more security, with a financial advisor being key for success.
Did Dave Ramsey say to stop 401k contributions?
Financial pundit Dave Ramsey's advice to pause 401(k) contributions while paying off debt forfeits employer match dollars and halts compounding growth. Staying invested through market downturns is a way to avoid missing the reward of the market rebounding.
Does Dave Ramsey recommend Roth or 401k?
For personal finance guru Dave Ramsey, one retirement account option stands apart from the rest. Ramsey recommended contributing to a company-administered 401(k), but not necessarily the traditional version. “We always recommend the Roth option if your plan offers one,” said Ramsey.
How many Americans have $500,000 in their 401k?
While exact numbers vary by report and year, generally around 7-9% of Americans have $500,000 or more in retirement savings, with slightly higher percentages for older age groups, though a significant portion of households have much less or no savings at all, highlighting a wide gap in retirement readiness.
How much should I put into my 401k?
Many companies offer 401(k) plans to encourage employees to save for retirement. Some even match contributions you make yourself. Aim to save at least 15% of your pretax income each year for retirement (including employer contributions).
Is 7% into a 401k good?
Contributing 7% to your 401(k) is a good start, especially if it gets you the full employer match, but financial experts generally recommend saving 10% to 15% (or more) of your income for retirement, including any employer contributions, to build sufficient savings for the long term.
How much will $10,000 in a 401k be worth in 20 years?
Here's what your $10,000 could be worth in 20 years
While it's invested, you earn a 10% average annual return. After two decades, your $10,000 would be worth $67,275. That's enough to cover a couple years' worth of retirement expenses for most people, especially when paired with Social Security benefits.
What is a good 401k balance by age?
Recommended 401(k) balances are often measured as multiples of your salary, with targets like 1x your salary by 30, 3x by 40, 6x by 50, and 8-10x by 67, though benchmarks vary slightly by source (e.g., Fidelity, T. Rowe Price). These benchmarks provide guidelines for retirement readiness, but your actual needs depend on lifestyle, retirement age, and expenses; it's crucial to save consistently, aiming for 15% of your income annually, including employer matches, to reach these goals.
What are the 4 funds Dave Ramsey recommends?
And to go one step further, we recommend dividing your mutual fund investments equally between four types of funds: growth and income, growth, aggressive growth, and international.
What is the 80 20 rule Dave Ramsey?
Dave Ramsey's 80/20 rule in personal finance is that success is 80% behavior and only 20% head knowledge; knowing what to do (the 20%) isn't enough, you must have the discipline to do it (the 80%) through actions like living on less than you earn, avoiding debt, and budgeting, which is the real challenge for most people. It emphasizes that financial discipline and controlling your actions, rather than just understanding financial concepts, are the keys to building wealth and achieving financial peace.
Is $500,000 enough to retire at 70?
Yes, retiring comfortably with $500,000 is achievable. This amount can support an annual withdrawal of up to $34,000, covering a 25-year period from age 60 to 85. If your lifestyle can be maintained at $30,000 per year or about $2,500 per month, then $500,000 should be sufficient for a secure retirement.
Can I retire at 70 with $400,000?
You can likely retire at 70 with $400k, but it depends heavily on your spending and other income (like Social Security); using the 4% rule (around $16k/yr initially) plus Social Security could provide $36k-$40k+ total income for a modest budget, but you'll need strict budgeting and may need to reduce expenses or work part-time for a comfortable retirement, especially with potential healthcare costs.
What is the average super balance of a 55 year old?
For a 55-year-old Australian, the average superannuation balance generally falls between $200,000 to $270,000 for women and $270,000 to over $300,000 for men, depending on the source and specific age bracket (50-54 or 55-59), with figures suggesting women average around $200k and men around $270k when interpolating data, though some averages show men potentially exceeding $300k by age 55-59.
How many Americans have $1,000,000 saved for retirement?
Only a small fraction of Americans retire with $1 million or more, with figures often cited around 3-4% of all retirees, though some sources suggest a slightly higher number for those nearing retirement (around 9-10% for ages 55-64). Data from the Federal Reserve's Survey of Consumer Finances shows that while many aspire to this goal, the reality is that most fall short, with average savings for older households being significantly lower than $1 million.
What is Dave Ramsey's warning about 401k?
Key Takeaway. Dave Ramsey's stark warning -- don't tap your 401(k) to pay a mortgage or debts -- resonates for anyone in a financial bind. For this caller, with limited savings and mounting debt, cashing out her $35,000 401(k) would cost her dearly in taxes, penalties, and lost growth, undermining her future security.
What is Dave Ramsey's 8% rule?
Dave Ramsey's 8% rule suggests retirees can withdraw 8% of their starting retirement portfolio value annually (adjusted for inflation) by investing 100% in stocks, assuming a 12% average return to cover withdrawals and inflation, but it's highly controversial, differing sharply from the traditional 4% rule and exposing retirees to high risk from early market downturns (sequence of returns risk), though some argue it works with specific high-yield assets or if debt-free.
What if I invest $1000 a month for 5 years?
Investing $1,000 per month for 5 years, with potential average annual returns of 6-10% in diversified assets like index funds, could grow your $60,000 in contributions to roughly $70,000 to $80,000, thanks to compounding, though actual returns vary significantly with risk, with S&P 500 historical averages around 10%. Options range from safer high-yield savings to higher-risk stocks, with index funds and ETFs offering diversification through S&P 500 exposure for steady growth.
What is the 25 rule Dave Ramsey?
The Ramsey 25% rule is a personal finance guideline by Dave Ramsey stating that your total monthly housing payment (mortgage principal, interest, taxes, insurance, HOA fees, and PMI) should not exceed 25% of your monthly take-home pay (after taxes). It aims to prevent people from becoming "house poor" by ensuring enough margin for other expenses, savings, and debt repayment, often combined with a 20% down payment recommendation to avoid Private Mortgage Insurance (PMI) on a 15-year fixed mortgage.
How much to put in a 401k with Dave Ramsey?
Ramsey's recommendation, which he shared on his website Ramsey Solutions, is to invest 15% of your gross income into your 401(k) and IRA every month.
What is the $1000 a month rule for retirement?
The $1,000 a month rule for retirement is a simple guideline stating you need about $240,000 saved for every $1,000 of monthly income you want from your investments, assuming a 5% annual withdrawal rate and a 5% annual return. It's a basic planning tool to estimate savings goals, suggesting you save $240,000 for $1,000/month, $480,000 for $2,000/month, and so on, but it doesn't account for inflation, taxes, or other income like Social Security, making it a starting point, not a complete strategy.