With uncertainty surrounding stock market volatility and the possibility of a recession, many American workers are concerned about managing their everyday expenses — paying mortgages or rent, keeping up with rising grocery and fuel costs, and handling other financial obligations.
While addressing these immediate financial pressures, they also prioritize long-term stability by investing in 401(k) plans and IRAs (Individual Retirement Accounts), aiming to secure their retirement and navigate the unpredictable economic landscape.
Dave Ramsey, the personal finance bestselling author and radio host, warns Americans about the challenges of saving for retirement, investing in stocks and 401(k) plans, and building wealth amid market instability.
Related: Dave Ramsey sounds alarm for Americans on Social Security
Enrolling in an employer-sponsored 401(k) plan remains a reliable method for growing retirement savings, particularly when companies offer matching contributions to enhance employees’ investments.
With automatic payroll deductions, this approach ensures consistent savings with minimal effort, making it both convenient and effective.
In 2025, the maximum contribution limit for 401(k) plans has risen to $23,500, up from $23,000 in 2024. Employees between the ages of 60 and 63 can benefit from higher catch-up contribution limits of $11,250, while those aged 50 to 59 have a cap of $7,500.
Ramsey outlines a few more vital facts about 401(k) plans and stocks that U.S. workers would be wise to consider.
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Dave Ramsey warns U.S. workers about 401(k) plan complexity
When people are at the beginning of the process of participating in their employer’s 401(k) plan, Ramsey explains, they are often presented with options that are difficult for an investing novice to understand, such as vesting, equities, risk choices and beneficiaries.
Ramsey shares a warning about the importance of being sure some basic 401(k) plan setup options are understood.
“Your ability to retire someday depends on you getting it right today,” Ramsey wrote. “But how can you make such major, long-term decisions when you don’t even understand what the choices are?”
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Ramsey explains his view on the very first place to start: A company’s plan document.
This document provides essential details about a company’s retirement plan, including employer matching contributions and the vesting schedule.
A vesting schedule determines when the money an employer adds to an employee’s 401(k) becomes fully theirs, Ramsey clarified. The funds contributed, along with any investment gains, are always the employee’s property, but many employers require a certain period of service before their contributions are entirely vested.
If one’s 401(k) includes an employer match, that’s a valuable benefit to accelerate retirement savings. Once a person is financially stable — debt-free with an emergency fund, as Ramsey describes it — one should invest enough to get the full match.
Some plans allow people to select investments for matched funds, while others offer company stock.
Related: Dave Ramsey sends strong message to Americans on 401(k)s
Dave Ramsey explains mutual funds and company stock
Mutual funds pool money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities. Experts manage these funds to help grow the money while reducing risk.
Ramsey cautions against target date funds, which many company retirement plans heavily promote. These funds adjust their investment mix based on an individual’s expected retirement date, starting with a balanced allocation of growth stock mutual funds.
However, as retirement nears, the portfolio shifts toward more conservative investments. Ramsey advises against relying on these funds because, by the time retirement arrives, most of the 401(k) assets will be placed in bonds and money market accounts.
These conservative investments may not generate the growth required to sustain retirees through three decades or more of financial needs. Instead, he encourages a strategy focused on maintaining strong investment growth, ensuring long-term financial stability throughout retirement.
If a person works for a publicly traded company, it may offer employees the chance to invest in its own stock, a choice about which Ramsey advises caution.
Employees may have the option to buy shares, sometimes through an Employee Stock Purchase Plan (ESPP), offered either upon hiring or after a certain period of employment. These plans often allow workers to acquire company stock at a discounted price through payroll deductions.
While a discount on stock might seem appealing, Ramsey warns against relying on it for retirement savings.
He emphasizes that company stock and ESPPs involve single stocks, which can be risky.
His approach is to avoid investing in individual stocks for long-term financial security, instead advocating for diversified investments that reduce risk and provide steadier growth over time.
“Putting all your eggs in one basket when it comes to the stock market is risky, even if that basket is the shiny new company you work for,” Ramsey wrote.
Related: Dave Ramsey warns Americans on Social Security
