{"id":2883,"date":"2026-07-06T08:05:05","date_gmt":"2026-07-06T08:05:05","guid":{"rendered":"https:\/\/charlotterelocationguide.com\/?p=2883"},"modified":"2026-07-06T08:05:05","modified_gmt":"2026-07-06T08:05:05","slug":"dave-ramsey-warns-americans-on-401ks-iras-hes-not-wrong","status":"publish","type":"post","link":"https:\/\/charlotterelocationguide.com\/?p=2883","title":{"rendered":"Dave Ramsey warns Americans on 401(k)s, IRAs (he’s not wrong)"},"content":{"rendered":"

Americans prioritize building reliable post-work income for their retirement<\/a> years, making Individual Retirement Accounts (IRAs)<\/a> a cornerstone of that effort.<\/p>\n

Read more Tesla\u2019s blowout quarter comes with a warning sign<\/a><\/p>\n

Traditional IRAs<\/a> use tax-deferred contributions with taxes paid upon withdrawal, whereas Roth IRAs<\/a> require upfront taxes so distributions are tax-free, according to the Internal Revenue Service<\/a>.<\/p>\n

Financial security relies on navigating these choices, leading many savers to seek retirement advice.<\/p>\n

Bestselling personal finance author Dave Ramsey<\/a> consistently recommends Roth IRAs over traditional IRAs, emphasizing the importance of tax-free withdrawals in retirement.<\/p>\n

“A traditional IRA<\/a> is funded with money before it’s taxed (pre-tax dollars), which gives you a tax deduction now,” Ramsey explains<\/a>. <\/p>\n

But Ramsey has a warning for Americans about traditional IRAs.<\/p>\n

“You’ll pay taxes on all your withdrawals in retirement (which includes your contributions and any tax-deferred growth,” he wrote.<\/a><\/p>\n

Before investing, households must eliminate consumer debt and establish a fully funded emergency reserve, according to Ramsey. <\/p>\n

Individuals should start by contributing to a workplace 401(k)<\/a> up to the employer match, Ramsey says.<\/p>\n

“This is the big one,” Ramsey emphasized<\/a>. “Probably the best thing about a 401(k) plan is that your employer can match your investment up to a certain amount. That’s a 100% return on your investment right off the bat. Matching isn’t required by the government, so not all employers offer it.”<\/p>\n

“If yours does, make the most of it. Don’t overlook free money.”<\/p>\n

The next step involves opening a Roth IRA<\/a> and maxing it out or investing up to a 15% goal, according to Ramsey. If a saver maxes out their Roth IRA without reaching that 15% threshold, they should return to their 401(k) and increase contributions, according to Ramsey. <\/p>\n

Both options serve long-term savers well, but the Roth IRA cannot be beaten for building wealth and achieving retirement dreams, according to Ramsey<\/a>.<\/p>\n

As I wrote June 29<\/a>, based on my own calculations, Ramsey’s advice about using Roth IRAs instead of traditional IRAs does turn out to be the more lucrative option in many scenarios.<\/p>\n

When a saver anticipates higher taxes in retirement, the Roth IRA is the more fruitful option, because paying taxes upfront protects future withdrawals from higher rates.<\/p>\n

An extended investment timeline combined with the expectation of higher tax brackets down the road gives the Roth IRA a significant edge, whereas facing the exact same tax rate during both your working and retirement years usually means both account types yield<\/a> comparable results.<\/p>\n

Choosing a traditional IRA typically makes more sense if you anticipate falling into a lower tax bracket during your post-work years, as your money grows tax-deferred and distributions will be hit with a smaller tax bill down the road.<\/p>\n

This raises an obviously important question, which I want to address here.<\/p>\n

Which Americans pay higher or lower tax rates during their working years than in retirement? This is a key question, because knowing where you fit in may well be the determining factor on whether you choose a traditional IRA or a Roth IRA for your retirement savings<\/a>.<\/p>\n

Read more Tokyo puts billions behind Micron\u2019s chip plan<\/a><\/p>\n

“Most Americans will have a lower tax burden in retirement than during their working years,” according to CNBC<\/a>. “However, that may not be the case for some retirees, especially for higher earners and big savers, which could have a significant impact on their financial plans, according to financial advisors.<\/p>\n

Recent federal tax data indicates that income tax rates remain highly progressive, resulting in distinct outcomes for different segments of earners when moving from their working years into retirement.<\/p>\n

More on personal finance:<\/strong><\/p>\n

Lower earners ($0 to $48,475 annually<\/a>) typically occupy the 10% or 12% marginal tax brackets during their working years, according to the IRS.<\/a> They almost always see their federal income tax rate drop to 0% in retirement. <\/p>\n

This happens because standard deductions protect a substantial baseline of income, allowing their Social Security and modest retirement withdrawals to fall completely outside the federal income tax net.<\/p>\n

Middle-to-upper-middle earners ($48,476 to $197,400 annually<\/a>) experience the most common shift, with their tax rates dropping significantly lower in retirement. <\/p>\n

During their peak working years, these individuals usually find themselves in the 22% or 24% tax brackets<\/a>. <\/p>\n

However, because retirees no longer need to replace 100% of their working income – since they are no longer saving for retirement or paying payroll taxes – their overall taxable income drops, often landing them back down in the 10% or 12% brackets.<\/p>\n

Towfiqu Barbhuiya on Unsplash<\/a><\/p>\n

High earners ($197,301 and up<\/a>) and diligent savers who occupy the 32% to 37% brackets<\/a> during their careers often see their tax rates stay the same or even increase. <\/p>\n

If an individual builds a massive pre-tax nest egg, mandatory Required Minimum Distributions<\/a> combined with investment income can easily keep them in a high bracket,<\/p>\n

“Required minimum distributions (RMDs) can take a toll on your tax bill,” Charles Schwab wrote<\/a>.<\/p>\n

This breakdown reveals a smart rule of thumb for your retirement savings strategy. If you are a lower or middle earner, a traditional IRA is statistically optimal because you get a tax break now at a higher rate than you will pay in retirement. <\/p>\n

Conversely, if you are currently a high earner or an early-career worker who expects to retire wealthy, a Roth IRA protects you from upper-tier tax brackets.<\/p>\n

Note:<\/strong> This piece of financial journalism is for educational purposes only and not for formal tax or investment advice.<\/em><\/p>\n

Related: Charles Schwab, Fidelity sound alarm on Roth IRA rule<\/a><\/strong><\/p>\n

The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.<\/i><\/p>\n

Read more Goldman Sachs sends strong wake-up call to Americans on AI job impact<\/a><\/p>\n

This story was originally published July 5, 2026 at 6:32 PM.<\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Americans prioritize building reliable post-work income for their retirement years, making Individual Retirement Accounts (IRAs) a cornerstone of that effort.<\/p>\n","protected":false},"author":1,"featured_media":2882,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-2883","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-read-todays-edition"],"yoast_head":"\nDave Ramsey warns Americans on 401(k)s, IRAs (he's not wrong) - \u0421harlotte Relocation Guide<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/charlotterelocationguide.com\/?p=2883\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Dave Ramsey warns Americans on 401(k)s, IRAs (he's not wrong) - \u0421harlotte Relocation Guide\" \/>\n<meta property=\"og:description\" content=\"Americans prioritize building reliable post-work income for their retirement years, making Individual Retirement Accounts (IRAs) a cornerstone of that effort.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/charlotterelocationguide.com\/?p=2883\" \/>\n<meta property=\"og:site_name\" content=\"\u0421harlotte Relocation Guide\" \/>\n<meta property=\"article:published_time\" content=\"2026-07-06T08:05:05+00:00\" \/>\n<meta name=\"author\" content=\"admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/?p=2883#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/?p=2883\"},\"author\":{\"name\":\"admin\",\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/#\\\/schema\\\/person\\\/8dbe691609d05fbc6dbaa5c440b54a93\"},\"headline\":\"Dave Ramsey warns Americans on 401(k)s, IRAs (he’s not wrong)\",\"datePublished\":\"2026-07-06T08:05:05+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/?p=2883\"},\"wordCount\":951,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/?p=2883#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/charlotterelocationguide.com\\\/wp-content\\\/uploads\\\/2026\\\/07\\\/c9a63057fc987a84269e7f017418d834.jpg\",\"articleSection\":[\"Read today's Edition\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/charlotterelocationguide.com\\\/?p=2883#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/?p=2883\",\"url\":\"https:\\\/\\\/charlotterelocationguide.com\\\/?p=2883\",\"name\":\"Dave Ramsey warns Americans on 401(k)s, IRAs (he's not wrong) - \u0421harlotte Relocation Guide\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/?p=2883#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/?p=2883#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/charlotterelocationguide.com\\\/wp-content\\\/uploads\\\/2026\\\/07\\\/c9a63057fc987a84269e7f017418d834.jpg\",\"datePublished\":\"2026-07-06T08:05:05+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/#\\\/schema\\\/person\\\/8dbe691609d05fbc6dbaa5c440b54a93\"},\"breadcrumb\":{\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/?p=2883#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/charlotterelocationguide.com\\\/?p=2883\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/?p=2883#primaryimage\",\"url\":\"https:\\\/\\\/charlotterelocationguide.com\\\/wp-content\\\/uploads\\\/2026\\\/07\\\/c9a63057fc987a84269e7f017418d834.jpg\",\"contentUrl\":\"https:\\\/\\\/charlotterelocationguide.com\\\/wp-content\\\/uploads\\\/2026\\\/07\\\/c9a63057fc987a84269e7f017418d834.jpg\",\"width\":1200,\"height\":674},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/?p=2883#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/charlotterelocationguide.com\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Dave Ramsey warns Americans on 401(k)s, IRAs (he’s not wrong)\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/#website\",\"url\":\"https:\\\/\\\/charlotterelocationguide.com\\\/\",\"name\":\"\u0421harlotte Relocation Guide\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/charlotterelocationguide.com\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/charlotterelocationguide.com\\\/#\\\/schema\\\/person\\\/8dbe691609d05fbc6dbaa5c440b54a93\",\"name\":\"admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/50b1ad2e498f523425ee0a8cc5180a210646db1622662a3d56cc405d3e0c346a?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/50b1ad2e498f523425ee0a8cc5180a210646db1622662a3d56cc405d3e0c346a?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/50b1ad2e498f523425ee0a8cc5180a210646db1622662a3d56cc405d3e0c346a?s=96&d=mm&r=g\",\"caption\":\"admin\"},\"sameAs\":[\"http:\\\/\\\/charlotterelocationguide.com\"],\"url\":\"https:\\\/\\\/charlotterelocationguide.com\\\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Dave Ramsey warns Americans on 401(k)s, IRAs (he's not wrong) - \u0421harlotte Relocation Guide","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/charlotterelocationguide.com\/?p=2883","og_locale":"en_US","og_type":"article","og_title":"Dave Ramsey warns Americans on 401(k)s, IRAs (he's not wrong) - \u0421harlotte Relocation Guide","og_description":"Americans prioritize building reliable post-work income for their retirement years, making Individual Retirement Accounts (IRAs) a cornerstone of that effort.","og_url":"https:\/\/charlotterelocationguide.com\/?p=2883","og_site_name":"\u0421harlotte Relocation Guide","article_published_time":"2026-07-06T08:05:05+00:00","author":"admin","twitter_card":"summary_large_image","twitter_misc":{"Written by":"admin","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/charlotterelocationguide.com\/?p=2883#article","isPartOf":{"@id":"https:\/\/charlotterelocationguide.com\/?p=2883"},"author":{"name":"admin","@id":"https:\/\/charlotterelocationguide.com\/#\/schema\/person\/8dbe691609d05fbc6dbaa5c440b54a93"},"headline":"Dave Ramsey warns Americans on 401(k)s, IRAs (he’s not wrong)","datePublished":"2026-07-06T08:05:05+00:00","mainEntityOfPage":{"@id":"https:\/\/charlotterelocationguide.com\/?p=2883"},"wordCount":951,"commentCount":0,"image":{"@id":"https:\/\/charlotterelocationguide.com\/?p=2883#primaryimage"},"thumbnailUrl":"https:\/\/charlotterelocationguide.com\/wp-content\/uploads\/2026\/07\/c9a63057fc987a84269e7f017418d834.jpg","articleSection":["Read today's Edition"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/charlotterelocationguide.com\/?p=2883#respond"]}]},{"@type":"WebPage","@id":"https:\/\/charlotterelocationguide.com\/?p=2883","url":"https:\/\/charlotterelocationguide.com\/?p=2883","name":"Dave Ramsey warns Americans on 401(k)s, IRAs (he's not wrong) - \u0421harlotte Relocation Guide","isPartOf":{"@id":"https:\/\/charlotterelocationguide.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/charlotterelocationguide.com\/?p=2883#primaryimage"},"image":{"@id":"https:\/\/charlotterelocationguide.com\/?p=2883#primaryimage"},"thumbnailUrl":"https:\/\/charlotterelocationguide.com\/wp-content\/uploads\/2026\/07\/c9a63057fc987a84269e7f017418d834.jpg","datePublished":"2026-07-06T08:05:05+00:00","author":{"@id":"https:\/\/charlotterelocationguide.com\/#\/schema\/person\/8dbe691609d05fbc6dbaa5c440b54a93"},"breadcrumb":{"@id":"https:\/\/charlotterelocationguide.com\/?p=2883#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/charlotterelocationguide.com\/?p=2883"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/charlotterelocationguide.com\/?p=2883#primaryimage","url":"https:\/\/charlotterelocationguide.com\/wp-content\/uploads\/2026\/07\/c9a63057fc987a84269e7f017418d834.jpg","contentUrl":"https:\/\/charlotterelocationguide.com\/wp-content\/uploads\/2026\/07\/c9a63057fc987a84269e7f017418d834.jpg","width":1200,"height":674},{"@type":"BreadcrumbList","@id":"https:\/\/charlotterelocationguide.com\/?p=2883#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/charlotterelocationguide.com\/"},{"@type":"ListItem","position":2,"name":"Dave Ramsey warns Americans on 401(k)s, IRAs (he’s not wrong)"}]},{"@type":"WebSite","@id":"https:\/\/charlotterelocationguide.com\/#website","url":"https:\/\/charlotterelocationguide.com\/","name":"\u0421harlotte Relocation Guide","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/charlotterelocationguide.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/charlotterelocationguide.com\/#\/schema\/person\/8dbe691609d05fbc6dbaa5c440b54a93","name":"admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/50b1ad2e498f523425ee0a8cc5180a210646db1622662a3d56cc405d3e0c346a?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/50b1ad2e498f523425ee0a8cc5180a210646db1622662a3d56cc405d3e0c346a?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/50b1ad2e498f523425ee0a8cc5180a210646db1622662a3d56cc405d3e0c346a?s=96&d=mm&r=g","caption":"admin"},"sameAs":["http:\/\/charlotterelocationguide.com"],"url":"https:\/\/charlotterelocationguide.com\/?author=1"}]}},"_links":{"self":[{"href":"https:\/\/charlotterelocationguide.com\/index.php?rest_route=\/wp\/v2\/posts\/2883","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/charlotterelocationguide.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/charlotterelocationguide.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/charlotterelocationguide.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/charlotterelocationguide.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2883"}],"version-history":[{"count":0,"href":"https:\/\/charlotterelocationguide.com\/index.php?rest_route=\/wp\/v2\/posts\/2883\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/charlotterelocationguide.com\/index.php?rest_route=\/wp\/v2\/media\/2882"}],"wp:attachment":[{"href":"https:\/\/charlotterelocationguide.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/charlotterelocationguide.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/charlotterelocationguide.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}