Why Financial Experts Say Dave Ramsey Is Wrong About 'Pausing 401(k) Contributions'

Core Insights - Dave Ramsey's advice to pause 401(k) contributions while paying off debt could lead to significant financial losses, including forfeiting employer matches and missing out on market rebounds [2][4] - Financial advisors suggest that paying down high-interest debt and saving for retirement can be balanced, rather than being mutually exclusive [3][6] Financial Implications - Pausing 401(k) contributions results in losing employer match dollars, which typically range from 4% to 5% of salary, representing real compensation [5] - Missing contributions during critical years can lead to tens of thousands of dollars less at retirement due to the impact of compound growth [5] - Automated 401(k) contributions facilitate dollar-cost averaging, which helps avoid timing mistakes in investing [5] Advisor Perspectives - Financial planners emphasize that the decision to pause retirement contributions should depend on the time horizon for repaying high-interest debt [6] - Concerns arise when clients maintain stable retirement balances without emergency reserves, indicating a misalignment in financial priorities [7]