Dave Ramsey Recommends You Put Your Retirement Money in These 2 Accounts

Are you investing your retirement money the right way? 

When you're saving for retirement, it's imperative you choose the right kind of accounts to put your money into. 

It can be difficult to determine which is best since there are many different kinds of investment accounts out there. But personal finance guru Dave Ramsey has recommended two specific types of accounts to use -- both of which are definitely worth considering. 

Here's where Ramsey believes you should put your retirement money. 

Your workplace 401(k) 

On the Ramsey Solutions blog, Ramsey makes clear that the very first thing you should do with your retirement money is to put it into a workplace 401(k). He suggests this because, like most financial experts, he believes it is very important to earn any matching funds your company provides -- which you can do only if you make 401(k) contributions. 

"If you have an employer-based plan like a 401(k) at work with a company match, start by investing there up to the match," the Ramsey Solutions blog reads. If your employer offers a choice of plans, Ramsey also makes it clear that there's a specific one you should choose. 

"If your company offers a Roth 401(k) option, that’s a deal too good to pass up. Take it! If you like your investment options in your Roth 401(k), you can simply invest your entire 15% there and you’re done."

A Roth 401(k) allows for tax-free growth, and you get to make tax-free withdrawals. This differs from a traditional 401(k) which, unlike a Roth 401(k) provides an upfront tax break in the year that the contributions are made but which does not offer tax-free withdrawals in retirement. 

Ramsey suggests a Roth 401(k) because he prefers Roth accounts with a deferred tax break, and believes a 401(k) is a simple, easy, and attractive investment -- especially with an employer match  

A Roth IRA

Not everyone has access to a Roth 401(k) at work, and for those who don't, Ramsey suggests putting money into a 401(k) to earn the match and then opening up a Roth IRA with a brokerage firm. 

Many different brokers offer IRA accounts, including Roths, with no fees. Ramsey suggests using one for any money saved above the amount needed to earn your matching funds, if your employer doesn't offer a Roth 401(k). 

"Once you’ve invested up to the company match, it’s time to move on to the Roth IRA. Remember, the Roth IRA lets you enjoy tax-free growth and tax-free withdrawals in retirement. Don’t miss that!" the Ramsey Solutions blog urges. 

When it comes to Ramsey's recommendations for retirement accounts, he's spot-on. Missing the company match would mean giving up free money, while Roth IRAs offer the chance to earn tax-free income as a retiree when you may need it most if you're living on a fixed income. 

If you want to set yourself up for a secure retirement, you should strongly consider following this advice and investing 15% of your income first in a 401(k) and then in a Roth IRA. This could make all the difference in ensuring the security you deserve in your later years.