Dave Ramsey Says This Common Money Mistake Could Follow You Into Retirement

Dave Ramsey posted on X. The blunt reminder came on November 4, 2026: “People become wealthy by staying out of debt and not sending payments to banks and lenders each month. Your most powerful wealth-building tool is your income, and without payments you get to keep it and invest it.” The radio host has spent decades advocating debt-free living. This line sums up the whole philosophy.

For anyone in their 50s or 60s, a lot of money rides on this. When the paycheck stops, every monthly payment gets paid out of a fixed pool: Social Security, a pension, and withdrawals from savings. A car note that felt minor on a salary can take a big bite out of a retirement check.

Ramsey Is Right, and Retirement Is Where It Pays Most

My take: the advice is sound for retirees, with one costly exception, since once you retire, your income stops growing through raises and promotions. Every debt payment becomes a fixed claim on a fixed income.

Start with Social Security. The Social Security Administration estimated the average retired worker’s benefit at $2,071 per month after the 2026 cost-of-living adjustment. Now add an example car payment of $550 and a credit card minimum of $250. Together they eat about 39% of that average check before you’ve bought groceries.

Taxes make it worse. Money pulled from a traditional IRA or 401(k) is taxed as ordinary income. Using an example 22% marginal federal rate, you need to withdraw about $1,026 a month just to net that $800. Over a year, that comes to roughly $12,308 drained from savings to service debt.

The 3.6% Social Security raise coming in 2027 helps with rising living costs. It works best when none of it is already promised to a lender.

Your Last Working Years Are Your Biggest Lever

The Bureau of Labor Statistics puts median weekly earnings for full-time workers at $1,232 in the third quarter of 2026. That’s about $64,064 a year.

An $800 monthly payment eats up $9,600, or roughly 15% of gross pay.

Say you clear the car and cards at 60 and send that $800 into a retirement account for five years. Using an example 6% annual return, you’d reach 65 with about $55,816 more saved. Your income stayed the same, and the payments started going to you instead of a lender.

Your Interest Rate Decides Whether Payoff Wins

Reasonable critics push back on Ramsey mostly over one thing: the rate on the debt compared with what the money could earn if you invested it.

Credit cards settle the question fast. For example, a $10,000 balance at 22% costs about $2,200 a year in interest. No conservative retirement portfolio reliably earns 22%, so paying the card off earns a guaranteed return that no investment can match. Ramsey wins this one outright.

A low-rate mortgage is a closer call. An example $150,000 balance at 3% costs roughly $4,500 in first-year interest.

The same money earning 6% would produce about $9,000. On paper, staying invested comes out ahead. The catch is that market returns can fall short in any given year, while the mortgage savings are locked in, so many retirees will reasonably give up some expected return to get rid of their largest fixed bill.

The real trap is draining tax-deferred accounts to pay off the mortgage. Suppose you pull that $150,000 from a traditional IRA at an example average tax rate of 25%.

You’d need to withdraw $200,000, which means sending $50,000 to the IRS to pay off a low-rate loan. A lump-sum withdrawal like that can also push you into higher tax brackets and raise your Medicare premiums two years later.

That sequence is a chain reaction. We mapped pre-tax withdrawals, bracket creep, and a Medicare surcharge two years out in a free guide to the nine IRS rules that quietly drain retirement accounts.

Steps to Take Before Your Final Paycheck

1. Map every payment. List each debt with its interest rate, monthly payment, and payoff date. Circle any that will still be running after your planned retirement date, because those are the ones your fixed income will have to cover.
2. Clear high-rate debt with current pay. Credit cards and car loans usually carry the highest rates. Pay them down from your paycheck while you still have one, so you don’t have to tap a taxable retirement account later.
3. Run the mortgage comparison carefully. Compare your mortgage rate with a realistic after-tax return on your investments. If the rate is low, think about extra principal payments spread over several working years instead of one big IRA withdrawal.
4. Check your actual benefit. Pull your estimate from your my Social Security account at SSA.gov. Then figure out what share of that check your current payments would eat if you retired today.
5. Don’t wait. Redirect freed payments right away. When a loan ends, raise your 401(k) or IRA contribution by the same amount that month, before the money gets absorbed into everyday spending.

Clear your debts with the paychecks you still have, leave your tax-deferred savings alone, and every payment you finish before retiring becomes income you keep for life.

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