Six Dave Ramsey Tips That Could Hurt Your Retirement Plan

This week, we’re diving into financial advice—and not just any advice, but the often-polarizing guidance from one of the most well-known voices in personal finance: Dave Ramsey.

Dave Ramsey has built a massive following through his radio show, books, and Ramsey Solutions courses. He's helped countless individuals get out of debt and build better money habits. But despite the good he’s done, some of his financial beliefs are... let's say, “outside the mainstream.”

So today, I want to break down six of Dave Ramsey’s most controversial financial opinions, share my thoughts on them, and include what many financial planners—myself included—recommend instead.

1. The 8% Retirement Withdrawal Rule

Ramsey’s Advice: Withdraw 8% annually from your retirement portfolio based on expected average returns of 11–12%.

Why It’s Controversial: Most financial planners—including myself—would never recommend an 8% withdrawal rate. That kind of drawdown assumes overly optimistic market returns, which simply aren't guaranteed.

The reality: A safer withdrawal rate is around 4–5%, based on historical data and retirement longevity. If you withdraw 8% and the market doesn’t cooperate (which it often won’t), you could outlive your savings. That’s a risk no retiree should take.

My take: It's risky and unrealistic. A diversified portfolio that includes bonds and cash will likely yield 6–8% on average, not 11–12%. Build your retirement income strategy around sustainability, not speculation.

Check out this week’s episode on: Retirement Reality Check with CFA, FRM, CFP Michael Sheldon

2. Pay Off Debt Before Contributing to Retirement

Ramsey’s Advice: Focus solely on debt repayment—even if it means not contributing to your retirement accounts.

Why It’s Controversial: While paying off high-interest debt (like credit cards) is wise, completely ignoring retirement contributions—especially if you get an employer match—is a huge missed opportunity.

The better approach: Prioritize both. Pay off high-interest debt while still contributing at least enough to get the employer match on your 401(k). Otherwise, you're leaving free money on the table.

My take: Debt freedom is important—but not at the cost of your future. Balance is key.

3. Always Choose Roth Accounts

Ramsey’s Advice: Always use Roth 401(k)s and Roth IRAs.

Why It’s Controversial: Roth accounts are fantastic for long-term tax-free growth—but they’re not ideal for everyone. If you're in a high tax bracket, using pre-tax accounts could save you more today and potentially reduce your lifetime tax burden.

Who should consider Roth: Younger savers in lower tax brackets or those expecting to be in a higher bracket later. But high earners close to retirement? Pre-tax likely makes more sense.

My take: It’s not one-size-fits-all. Your current and future tax brackets should guide your decision.

4. Favoring Actively Managed Mutual Funds (and Paying Front-End Loads)

Ramsey’s Advice: Invest in actively managed mutual funds, even those with upfront commissions (loads).

Why It’s Controversial: Most data shows that active funds rarely outperform passive index funds over time—especially after factoring in higher fees.

What he gets wrong: Ramsey downplays the value of low-cost index investing, and even suggests that saving on fees “won’t make you rich.” But 1% saved annually in fees can add up to tens or even hundreds of thousands over a few decades.

My take: Embrace low-cost index funds—they’re efficient, diversified, and backed by decades of performance data. Avoid unnecessary commissions if better, no-load options exist (and they do).

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5. Only Get a 15-Year Mortgage

Ramsey’s Advice: Only buy a home if you can afford a 15-year mortgage.

Why It’s Controversial: While it’s true that 15-year loans save you on interest, they also increase your monthly payments significantly—often pricing many buyers out of the market.

Better approach: A 30-year mortgage with extra principal payments gives you flexibility. You can pay it off faster if you want to, but you're not locked into a higher required monthly payment.

My take: There’s nothing wrong with a 30-year mortgage, especially if you invest the difference. Flexibility and liquidity are often worth more than faster amortization.

6. Never Use Credit Cards—Only Debit or Cash

Ramsey’s Advice: Avoid credit cards altogether. Stick to cash or debit cards.

Why It’s Controversial: For some, this is necessary—especially those who struggle with overspending. But for disciplined users, credit cards can offer valuable rewards, points, and fraud protection.

The trade-off: If you’re responsible, credit cards can give you 1–2% cashback or travel rewards, plus better consumer protections. Just make sure you pay off your balance every month.

My take: The “no credit cards ever” rule is overly strict. Credit cards can be a smart financial tool—if used wisely.

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Final Thoughts

Dave Ramsey’s approach works incredibly well for a certain segment of the population—particularly those deep in debt and needing tough love to get on track. But when it comes to long-term financial planning, many of his ideas fall short or are simply outdated.

As a fiduciary advisor, my job is to offer personalized advice—because one-size-fits-all rarely fits anyone well.

If you have a question or topic that you’d like to have considered for a future episode/blog post, you can request it by going to www.retirewithryan.com and clicking on ask a question. 

As always, have a great day, a better week, and I look forward to talking with you on the next blog post, podcast, YouTube video, or wherever we have the pleasure of connecting!

Written by Ryan Morrissey

Founder & CEO of Morrissey Wealth Management

Host of the Retire with Ryan Podcast