Ask Dave Ramsey Healthy Finance

Dave says: Advice on retirement and life insurance.

Written by Dave Ramsey

That’s a lot!

Dear Dave,

I’m on Baby Step 1 of your plan, and I work at a community college that takes a mandatory 20 percent from our pay for retirement. I know you say retirement contributions should be put on hold until all debt except for your home is paid off, so do you have any thoughts on this kind of system? It feels like it’s hard to get traction with getting control of my money when so much is being taken out of every paycheck.


Dear Kristi,

That is a lot to take out. I’ve heard of a few places that have a mandatory 12 percent contribution, but 20 percent? That’s very unusual. And it’s unusually high.

I’m not sure what to tell you. I mean, you took the job. It’s what you signed up for. But if it becomes enough of an issue with your finances, you may have to decide at some point whether you still want to work there. My recommendation is to begin setting aside 15 percent of your income for retirement after you’ve paid off all debt except your home, and you have an emergency fund of three to six months of expenses in the bank. 

At least you’re not losing the money, so it’s not the end of the world. It’s your money that’s going in there for your use someday. I don’t know the exact structure of the retirement account, but it is going toward retirement savings of some kind—and that’s important! 


About the author

Dave Ramsey

Dave Ramsey is a personal money management expert, a national radio personality, and best-selling author of The Total Money Makeover. Ramsey earned his Bachelor of Science in Finance and Real Estate from the University of Tennessee. A frequent speaker around the country at large-scale live events, he has a nationally syndicated talk show, The Dave Ramsey Show.

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