Dave Ramsey gives a blunt verdict on whether a 401(k) can be enough

For American workers worried about whether their retirement savings and investing strategy will be enough, bestselling author Dave Ramsey has a direct answer about whether a 401(k) by itself can fund life after work.

“It might be if you have access to a Roth 401(k), solid investment options and are able to invest 15% of your income,” Ramsey wrote. “It might not be if one or more of those above points aren’t true in your case. You may need to look at options outside your workplace retirement plan, like a Roth IRA.”

Still, Ramsey says people should wait to start retirement investing until they are completely debt-free and have a fully funded emergency fund. He also recommends stopping all investing until every consumer debt is paid off.

Dat Ngo, a CPA at Vetted Prop Firms, offered his view of Ramsey’s approach.

“Ramsey’s sequencing works for most people because it accounts for behavior, not just math, and a plan someone will actually follow beats a theoretically optimal one every time,” Ngo told me.

“The one adjustment I’d flag is the employer match: if a workplace plan offers one, it’s often worth capturing that match even while paying down high-interest debt, since it’s close to free money. Once the emergency fund is solid, the Roth IRA’s tax-free growth makes it a logical next step for long-term savers.”

Using Ramsey’s National Study of Millionaires, which he describes as the largest survey of its kind, about 80% of millionaires said their 401(k) was the main driver of their financial success.

“Those millionaires are the kind of people who live next door to you (teachers, managers, accountants) — they just used their workplace retirement plans,” Ramsey wrote.

“It’s not the most exciting way to invest,” he added. “But it is exciting to become a millionaire.”

Ramsey pushes saving 15% of income in a 401(k)

As noted above, Ramsey advises putting 15% of gross income into a tax-advantaged retirement account, often an employer-sponsored 401(k).

In my years of reporting on finances, I have found that a 401(k) gives retirement savers a simple and consistent way to invest, letting them automate contributions directly from each paycheck with a true set-it-and-forget-it approach.

Along with that convenience, 401(k) plans offer another major advantage: higher contribution limits than Individual Retirement Accounts, or IRAs.

In 2026, workers can contribute up to $24,500 to a 401(k), according to the Internal Revenue Service. Savers age 50 and older may add an extra $8,000 in catch-up contributions, while those between ages 60 and 63 qualify for an expanded catch-up allowance of $11,250.

“The limit on annual contributions to an IRA is increased to $7,500 in 2026 from $7,000 in 2025,” wrote the IRS.

For savers age 50 and older, the IRA catch-up contribution limit has risen to $1,100 from $1,000, reflecting the latest cost-of-living adjustment.

Fidelity explains weak participation in Roth 401(k) plans

Even as the IRS continues to raise how much workers can save, higher limits do not necessarily mean people know how to use them well.

Ramsey strongly favors Roth 401(k)s over traditional accounts, but data from Fidelity Investments shows a major gap between what plans offer and what employees actually use.

More than 96.5% of workplace retirement plans administered by Fidelity now include a Roth 401(k), yet only 18% of eligible employees actively contribute to one, according to Fidelity. The feature is used across income levels and demographics, but it is most popular among savers ages 29 to 44.

The slow adoption of Roth 401(k)s is largely tied to limited awareness and the habit of choosing traditional, pre-tax accounts.

“Many people just don’t understand the option so they haven’t chosen it,” said Ellen O’Connell, a vice president and financial consultant at Fidelity. “Some don’t know if their company offers it, some just assume they aren’t eligible, and some are just used to getting that lowered income tax now.”

This article is for informational purposes only and should not be construed as individualized tax or investment advice.

The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.