Dave Ramsey: 8 Money Habits That Could Do Major Retirement Damage After 50

Once you turn 50, you're close to retirement age, which means it's a good time to evaluate many of your money habits. Dave Ramsey, a personal finance expert and founder of Ramsey Solutions, warns that many people after age 50 make financial mistakes that could derail their retirement prospects.

So, if you have a retirement plan and want to stop working at a specific age, review the habits and mistakes Ramsey warns about so you don't cause major damage to your retirement prospects.

Not opening a Roth IRA retirement account

Ramsey encourages people to open Roth IRAs, even if they already have 401(k)s. He's a big proponent of opening Roth IRAs because they have tax benefits in retirement. Because you contribute after-tax income to Roth IRAs, you could withdraw money tax-free in retirement, as long as you meet certain qualifications.

Ramsey explains that another benefit is that Roth IRAs do not have Required Minimum Distributions (RMDs) like 401(k)s do. That means you could leave money in your Roth IRA for as long as you want without needing to make legally required withdrawals.

Carrying debt and minimum payments into retirement

Ramsey recommends being completely debt-free, including your mortgage, when you retire. This helps you avoid having multiple minimum payments that could negatively impact your cash flow in retirement. To pay off debt, Ramsey recommends the snowball method, where you pay off your debt starting with the smallest balance and moving to the largest. The snowball method builds momentum and helps you feel accomplished as you pay off smaller debts.

Not creating a zero-based budget

Another habit that could negatively impact your retirement years is spending money without having a set budget. Ramsey teaches something called a zero-based budget where you assign every dollar a job. Then, as the month goes on, you record your spending to ensure you stay within your budget.

Ignoring 50-plus catch-up contributions

When you turn 50, you are eligible to make catch-up contributions to your retirement accounts. For 2026, you could contribute an extra $8,000 on top of the $24,500 401(k) maximum. You could also make an extra $1,100 contribution to a traditional or Roth IRA. For many people, this is your last opportunity to top off your retirement accounts, so ignoring it could be a missed opportunity.

Not having a robust emergency fund

Dave Ramsey recommends having an emergency fund equal to 3 to 6 months of your expenses. In fact, he recommends having this before people start investing. The purpose of an emergency fund is to insulate you when life's hardships come up. People often have to deal with unexpected emergencies, like work layoffs or health scares.

Not having an emergency fund could lead people into debt, which could be stressful. Once you're in your 50s and looking forward to retirement, an emergency fund is more important than ever, as having one could prevent you from dipping into your retirement accounts to pay for unexpected expenses.

Giving in to lifestyle creep and status spending

Another habit that could negatively impact your retirement prospects is giving into lifestyle creep and status spending. When you're in your 50s and nearing retirement, inflating your lifestyle could prevent you from retiring on time if increased spending is taking away from your retirement savings goals.

Dipping into a 401(k) early with loans or withdrawals

If you withdraw from your 401(k) before age 59.5, you would have to pay a 10% penalty. Additionally, if you take out a 401(k) loan and don't pay it back, that could count as an early withdrawal as well. Plus, any money you take out of your 401(k) isn't compounding and growing in the market, which could leave you short on your retirement goals.

Over-relying on Social Security to fund retirement spending

Ramsey cautions people against using Social Security as their primary source of income in retirement. He explains that Social Security should just be added income for retirement, not your entire retirement check. If you're in your 50s and don't feel like you have to save for retirement because you have Social Security, Ramsey cautions against this. The main reason is that the OASI Trust Fund reports that in 2032, the trust would only be able to pay out 78% of Social Security benefits, unless Congress makes new laws to correct this deficit.

Bottom line

If you want to reach your retirement goals, it's important to evaluate the money habits you have now to ensure they're supporting your future goals. Some of the mistakes listed above could hurt your retirement prospects, but fortunately, if you're in your 50s, there's still time to get your retirement on the right track.

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