By Nicholas Hamner
Investment Advisor Representative
[email protected]
If you use a Windows computer, chances are you see the MSN frontpage when you open your browser. And there was a terrible article on there this week. You may have seen it, it was titled “Dave Ramsey warns to stop 401(k) contributions.” According to this article, Dave Ramsey—noted financial talking head and University of Tennessee football fan—had apparently been quoted as advising folks to stop investing in their 401(k)s amid economic uncertainty. And, to top it off, JPMorgan… not any person within JPMorgan so apparently a corporate entity gained the ability to communicate and did so… is apparently urging individuals to abandon the idea of saving $1,000,000 or more for retirement.
This is terribly broad and terribly generic and… terrible… advice, and the more I read the article (presumably written by a person named Alexander Clark) the more I couldn’t believe it was put together by anyone familiar with who they quoted. So I ran it through an AI detector and—amazingly—the whole thing was compiled by AI. Badly.
Where is this terrible article? I’m not telling you, and I intentionally haven’t linked to it. It’s that bad.
But the headline exists, and the article is circulating, and you might be wondering why anyone would recommend not funding a 401(k) and, especially, why anyone would abandon any goal of having as much money as possible in retirement? Both of those are good questions and we’ll work through them here.
First, has Dave Ramsey told anyone to stop funding their 401(k) because of economic uncertainty? No.
Has Dave Ramsey told anyone to stop funding their 401(k) forever? No.
Has Dave Ramsey suggested that people might consider pausing their 401(k) contributions for a short time to prioritize greater financial responsibilities? Yes.
The idea is part of Dave Ramsey’s Baby Steps. His Baby Steps are oft-repeated and little-understood, but to quickly summarize them:
- Save $1,000 for a starter emergency fund.
- Pay off all debt (except the house).
- Save 3-6 months of expenses for a fully funded emergency fund.
- Save 15% of your income.
- Save for your children’s college fund.
- Pay off your home early.
- Build wealth and give.
As part of step two, aggressively paying off all debt, Ramsey has frequently suggested that his listeners and program followers briefly pause funding their 401(k) if doing so gets in the way of their paying off debt. Why? Because bad debt almost always grows faster than good investments. If you invested $1,000 in an S&P index ETF in 2015, you’d have somewhere around $3,000 today. If you bought $1,000 worth of stuff on a credit card with 29.99% interest in 2015, you would owe north of $13,000 today. For people with bad debt, eliminating that debt is almost always the higher financial priority than contributing to a retirement savings account.
Now, to the statement attributed to JPMorgan, that individuals should stop aiming for $1,000,000 in retirement savings.
With retirements lasting longer and cost of living steadily increasing year over year, why would anyone advise anyone to save less than they could, whether that’s $1 million, less, or more? They shouldn’t, and JPMorgan didn’t. AI once again interpreted things incorrectly.
JPMorgan issued their Guide to Retirement for 2025. In that document, they make a distinction between personal savings and employer-backed retirement plans (401(k)s, 403(b)s, etc.). They then formulate that people from different incomes should expect to replicate said income from a mix of personal savings, Social Security, and employer-backed retirement plans. They then state that people used to a certain working income can foreseeably replicate that income in retirement through a mix of employer-backed retirement plans, Social Security, and personal savings under $1,000,000. Not all people. Some.
While the distinction does exist between personal savings (bank accounts, IRAs, etc.) and employer-backed retirement plans, I don’t know of a single person in this world who doesn’t consider their employer-backed retirement plan part of their savings. Another misinterpretation by AI.
There are a couple of lessons here. Don’t believe everything that you read. If something doesn’t sound right, look around at other sources. Chances are, your hunch was right. As a fancier search engine and as an image- or video-creation toy, AI is fine. For serious things, AI as it is available to you and me isn’t there yet. And finally, there is no universal piece of retirement savings advice. How much you save, how you save, where you save it, etc. are all decisions that need to be made at an individual level. And if you need help with any of it, consult with a professional. Not AI.
And hey, as it just so happens, we are professionals. If you need some help, give us a call at 215-657-9200.