Dave Ramsey’s Top Guidance for Those About 5 Years from Retirement

When retirement is only a few years away, the finish line is in sight. At that stage, many people are already imagining how they will spend their time once work ends.

Financial expert Dave Ramsey offers several suggestions for people preparing to leave the workforce. His advice includes boosting retirement savings, building an emergency fund, and ideally getting fully out of debt, mortgage included.

Eliminate consumer debt before retirement

Ramsey is a strong advocate for becoming debt-free. He has even said people should clear debt before they start investing. For those who already have investments but are carrying high-interest debt, he recommends using the snowball method to pay it down.

This matters even more for people nearing retirement, since income usually shifts from a paycheck to a fixed budget. With less money coming in, eliminating monthly debt payments can create valuable breathing room.

Try to pay off the mortgage

Along with paying off consumer debt, Ramsey also encourages people to invest 15% of income and keep a 3- to 6-month emergency fund. He also recommends entering retirement without a mortgage, if possible.

For someone planning to retire in a few years, that can be an important goal because it lowers ongoing expenses and improves cash flow.

Keep investing in the final working years

During the last several years before retirement, Ramsey advises continuing to invest 15% of gross income in retirement accounts.

He also points out that people who are behind may be able to use catch-up contributions. Investors over 50 can add an extra $8,000 a year to a 401(k), while those between 60 and 63 can contribute an additional $11,250 on top of standard maximums. That can help workers use their highest-earning years to strengthen retirement savings.

Prepare for healthcare costs Medicare may not cover

Even though Medicare becomes available at age 65, retirees still need to plan for costs it does not fully pay. Ramsey Solutions suggests long-term care insurance, a dedicated savings account, and HSA contributions for those who qualify.

Those steps can help offset medical expenses. Fidelity estimates that a 65-year-old retiring in 2026 will spend an average of $185,500 on healthcare and medical costs during retirement.

Maintain a strong emergency fund

As part of the 7 Baby Steps Ramsey teaches, he recommends keeping an emergency fund equal to 3 to 6 months of expenses. That reserve becomes especially useful in retirement, when it can help cover unexpected bills or provide a cushion if markets decline.

Retirees generally want to avoid pulling money from a 401(k) during a downturn, so having cash set aside can be a major advantage.

Consider working longer if needed

Ramsey Solutions also says that if retirement savings are behind schedule, working a few extra years may be worth considering. A longer career can allow for additional 401(k) contributions and more time to take advantage of catch-up limits.

Even a relatively short delay can make a meaningful difference in the size of a retirement nest egg.

Ramsey’s suggested withdrawal rate is higher than many experts recommend

As retirement approaches, it is also wise to think through how withdrawals will work. Ramsey’s view differs from many financial planners. He has argued that the commonly cited 4% withdrawal rule is too cautious for people in strong financial shape and suggests something closer to 8%.

Some advisors disagree and say that 8% is too aggressive. That is why people need to review their own finances carefully before deciding how much they can safely withdraw. It is also important to remember that claiming Social Security at 62 can permanently reduce benefits, so timing matters.

The takeaway

The final years before retirement are a chance to get ready for life after work. Ramsey’s ideal approach is to retire completely debt-free, including the mortgage, while also maintaining savings and continuing to invest consistently.

It is also important to plan a withdrawal strategy. If you are unsure how to reach your retirement goals, a financial planner can help assess your situation and suggest a practical path forward.