Dave Ramsey says it’s the ‘best way’ to grow your retirement account balance. is that correct?

Dave Ramsey’s advice may make sense — but only for some investors.

Investing for retirement is important for a secure future. You’ll need money to supplement Social Security, which replaces only about 40% of your pre-retirement income.

but, of course How Should You Invest Enough to Support Yourself in Your Later Years? Finance expert Dave Ramsey offers some insight about the optimal approach to growing your retirement account balance.

Here’s How Dave Ramsey Thinks You Should Be Investing For Retirement

Ramsey offers some simple advice to help you grow your retirement nest egg.

“If you have a traditional 401(k), the best way to help it grow at a steady pace is to invest in your company match and invest the rest in a Roth IRA so it can grow tax-free. ” Ramsey advised, He also suggests putting away 15% of your income for retirement with the money spread between your 401(k) and Roth IRA at a brokerage firm.

A company match is provided by many employers who offer workplace 401(k) accounts. Essentially, it’s free money given to you by your employer when you contribute to a 401(k). You can contribute with pre-tax money, so each year you invest, you save on your tax bill to an extent. If you invested $5,000, for example, you could save up to $1,100 on your taxes if you were in the 22% tax bracket, so your contribution would effectively only be $3,900.

A Roth IRA, on the other hand, doesn’t come with an advance tax break. You can claim your tax savings later. You don’t have to deduct your contribution when you make it, but you can take tax-free withdrawals from the account. It differs from a traditional 401(k) because your 401(k) withdrawals Are As a retiree, you are taxed at your ordinary income tax rate.

Ramsey’s advice here is to first use an account that offers upfront tax breaks, only to get your employer match — then to choose an account that gives you tax-free money as you retire. However, he says that if your company offers a Roth 401(k), you can put all of your retirement contributions into that account, assuming it offers a good mix of investment options.

Should you take Ramsey’s advice?

Ramsey is correct that you must put money into a 401(k) to earn your employer match.

But whether you should invest in a Roth IRA over a 401(k) depends on your situation. If you think you’ll be in a higher tax bracket as a retiree, it makes sense to defer your tax savings until then. But if you expect your tax rate to go down, a 401(k) may be a better option. A traditional IRA can be a good option if you want an upfront tax break but would prefer some of your money in a brokerage account that offers more investment options than a typical 401(k).

Think about your own tax situation when you decide whether Ramsay’s advice is worth following. No matter what type of account you use, though, Ramsey is likely right that you should try to put away 15% of income for retirement and start working toward that goal if you can. You’re not saving that much already.