Americans preparing for retirement often grapple with multiple concerns, primarily centered on achieving financial security and maintaining their preferred lifestyle after leaving the workforce.

A significant part of this planning involves estimating potential Social Security benefits and determining how much one can rely on retirement savings and investments, such as 401(k) plans and Individual Retirement Accounts (IRAs).

Dave Ramsey, the radio host and bestselling financial author, shares valuable insight on Social Security and cautions Americans about a key challenge some encounter when striving to contribute as much as they can to employer-sponsored 401(k) plans.

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While Social Security remains an essential source of retirement income, depending on it entirely is not a viable plan for a comfortable lifestyle.

Uncertainties surrounding the federal program’s long-term viability, adjustments for inflation, and potential benefit reductions due to dwindling trust funds create added financial stress for retirees.

Ramsey underscores the fact that postponing Social Security benefits results in higher monthly payments, with the maximum amount accessible to those who wait until age 70.

However, he also points out that delaying benefits means fewer overall payments throughout retirement, which could ultimately lead to a lower total payout based on a person’s lifespan.

Related: Jean Chatzky sends strong message to Americans on Social Security

Health is an important factor in deciding when to claim Social Security, Ramsey notes. Those anticipating significant medical expenses may benefit from taking payments earlier, ensuring essential financial support for themselves and their loved ones.

Meanwhile, individuals in good health who expect to rely on Social Security for daily living costs might consider delaying their claim to secure higher monthly benefits.

With these considerations in mind, Ramsey provides essential guidance to help Americans navigate the complexities of retirement savings and make informed financial decisions — particularly with regard to 401(k) plans.

Dave Ramsey speaks with TheStreet about personal finance issues. The radio host and bestselling author warns Americans on the importance of a key retirement strategy regarding debt and contributing to 401(k) plans.

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Dave Ramsey looks beyond Social Security to 401(k) plans — with a warning

Because Social Security monthly paychecks are not sufficient to cover the entirety of one’s retirement expenses, many Americans make the smart choice of participating in their employer-sponsored 401(k) plans.

But Ramsey warns of one instance when one should delay those 401(k) contributions: when a person is attempting to get out of debt. 

While a person is prioritizing becoming debt-free, Ramsey suggests they stop all retirement savings, even if a 401(k) plan involves an employer match. 

More on retirement:

• Jean Chatzky shares major statement about Social Security
• Shark Tank’s Kevin O’Leary has blunt words on 401(k) plans
• Dave Ramsey strongly cautions U.S. workers on Social Security

“This makes a lot of people nervous, and I understand that. I’m a math nerd, and I know that getting a 100-percent match on your contributions is a sweet deal,” Ramsey explained in his book “Dave Ramsey’s Complete Guide to Money.”

“That’s why I want you to get out of debt as fast as possible, so you can get back to your investments and really do it with style without worrying about debt payments hanging over your head,” he added.

Related: Tony Robbins sends strong message to Americans on 401(k)s, IRAs

Dave Ramsey shares another key 401(k) warning

Ramsey advises temporarily pausing 401(k) contributions for about 18 months to focus on eliminating debt. He believes this short-term shift frees up more money for repayment and adds urgency to the process. 

Once debts are cleared, financial freedom allows for greater savings and investing opportunities, Ramsey explains. While deeper financial struggles may require longer adjustments, he sees this strategy as an effective way to accelerate debt payoff and build long-term stability.

Related: Shark Tank’s Kevin O’Leary warns Americans on 401(k)s

Ramsey shares one more warning regarding 401(k)s.

“Although I want you to stop contributing to your retirement account temporarily, I do not recommend cashing out your 401(k) or other retirement accounts and using that money to pay off debt,” Ramsey wrote. 

“If you cash out a 401(k) early, you’ll lose around 40 percent of your money in penalties and taxes,” he added. “That is literally throwing half your money out the window, and it is a horrible, horrible idea.” 

“Don’t do it, no matter how tempting it is, unless it is the only thing that will keep you from a bankruptcy or foreclosure.”