What Should I Invest In After Maxing Out My 401(k)?

Summary

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Podcast Summary: Ramsey Everyday Millionaires

Episode: What Should I Invest In After Maxing Out My 401(k)?
Date: May 20, 2026
Hosts: Dave Ramsey, George Kamel (Ramsey Network)
Caller: Matthew from Hartford, Connecticut

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Overview

This episode addresses a highly relevant question for listeners who are advancing in their financial journey: What should you do after maxing out your 401(k)? A caller named Matthew seeks advice after hitting his 401(k) annual limit, leading Dave Ramsey and co-host George Kamel to lay out the optimal next steps. The hosts explore priority-based investing, the importance of a paid-off home, and effective wealth-building strategies typical among everyday millionaires.

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Key Discussion Points & Insights

1. Matthew’s Situation and Question

• Caller Context:

  • Matthew has maxed out his 401(k) with four months left in the year.
  • His company offers an after-tax option that can roll into his 401(k) Roth.
  • He still has a mortgage.

• The Essential Question:

  • Should Matthew invest more in retirement accounts, or use extra money to pay down his mortgage?

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2. Ramsey's Baby Steps and the Millionaire Path

[00:44–01:38]

• Dave Ramsey’s Advice:
  • After maxing out 401(k) (Baby Step 4: 15% of income to retirement), move to Baby Step 5 (childrens’ college if applicable), and then Baby Step 6: Pay off the mortgage before any additional investing.
  • The Ramsey study shows: The typical American millionaire “has a paid-for home and a healthy, muscle-bound 401(k) account” (Dave Ramsey, 00:50).
  • Once the house is paid off (Baby Step 7), it's time to max out every retirement opportunity possible—backdoor Roths, after-tax contributions, etc.

"You're going to have both if you go this route."
— Dave Ramsey, [00:48]

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3. Advanced Strategies: Backdoor Roths and Beyond

[01:40–03:43]

• George Kamel on Backdoor Roths:
  • For people whose income is too high for a regular Roth IRA, consider the "backdoor Roth": contribute after-tax dollars to a traditional IRA, then convert to a Roth IRA (George Kamel, 02:38).
  • There's also a “mega backdoor Roth 401(k)” for high earners, involving after-tax contributions to 401(k) and in-plan Roth conversions.
  • At Ramsey Solutions, few employees are eligible or take advantage until they reach Baby Step 7—when everything else is paid off.

“But at that point, it’s a good option to have. But again, to your point, I’d rather have the house paid off first before I’m adding extra to retirement…”
— George Kamel, [01:58]

• Dave Ramsey’s Personal Practice:
  • He maximizes all retirement accounts now, but only after decades of no debt and a paid-off house.
  • He highlights the Roth IRA’s advantages: all future growth untaxed, no Required Minimum Distributions (RMDs), tax-free inheritance for heirs.

“And all the growth on that for the rest of my life will not be taxed and it will not be subject to inherited IRA rules. Not taxed to my heirs.”
— Dave Ramsey, [03:13]

• Memorable generational wealth planning:
  • “Papa Dave did it, have done a Roth. So there we go.”
    — Dave Ramsey, [03:26]
  • “You can thank him now.”
    — George Kamel, [03:30]

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4. Humor and Memorable Moments

[03:47–04:03]

• The hosts joke about Dave Ramsey’s longevity and reputation for persistent advice, even imagining him broadcasting well past 100.

“I think sheer willpower and spite, Dave will outlive us all. That’s my greatest fear.”
— George Kamel, [03:50]

“I’ll be on here spreading hate and dissension long after the rest of you are gone.”
— Dave Ramsey, [03:54]

“I’ve always said he’s the Methuselah of personal finance.”
— George Kamel, [04:01]

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Important Timestamps

• 00:18 – Matthew presents his investing question.
• 00:44 – Baby Steps 4, 5, 6 explained; importance of a paid-off house.
• 01:40 – Backdoor and mega backdoor Roths discussed.
• 02:38 – Explanation of how backdoor Roth works.
• 03:13 – Tax advantages and inheritance benefits of Roth IRAs.
• 03:47–04:03 – Humorous exchange on Dave’s longevity and steadfast advice.

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Actionable Takeaways

• Once you’ve maxed out your 401(k) (15% of income), use extra funds to pay off your mortgage before seeking advanced investing strategies.
• Only after the house is paid for (Baby Step 7) should high-income or advanced savings vehicles (like backdoor Roths) come into play.
• Building wealth as an everyday millionaire means a simple, focused approach: stay out of debt, live below your means, and invest consistently.

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Conclusion

This episode distills the Ramsey philosophy: financial freedom and wealth-building are built on simple, disciplined steps—max out retirement contributions, pay off your home, and only then explore more sophisticated investing options. The hosts’ perspectives offer both practical steps and a generational vision, all delivered with their characteristic wit and clarity.

Transcript

[A]

Foreign.

[B]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Matthews in Hartford, Connecticut.

[A]

Hey Matthew.

[C]

Hey, how's it going? Thank you for taking my call.

[A]

Sure.

[C]

I, I maxed my 401k out like 3, 4 months left in the year. Put in the 15 in like you guys like tell us it's a good idea to and my company has an after tax account that I can continue to put a percentage of my check in after taxes that rolls into my 401k Roth.

[A]

Do you have a mortgage?

[C]

I do have a mortgage.

[A]

Put it on that, don't put it in that pay mortgage.

[C]

That was, that was, that was the only question I had.

[A]

Okay. It's easy. Yeah. We tell people when you're in baby steps four, five and six, four is 15% of your income going into retirement. Five is kids, college, any other money we can find above living life, well, we're going to throw out and pay off the mortgage next because what we found Matthew, the data tells us that the typical millionaire in America and we've done the largest study on them of anybody has a paid for home and a healthy muscle bound 401k account. You're going to have both if you go this route. Now when the house is paid off you can go back and play some of these other games. You can max out. You can, you know, you get to this year be 24, 5. If you're over 50 you could do or over 60, you could do 11, 250 extra. Do all those kinds of games. I do every bit of that. I do everything I can do. I'm 66 and I'm. But I don't have any debt and hadn't had in 20, 30 years. So I'm just, I just, I'm always maxing that stuff. I don't have any mortgages.

[B]

It's a baby step seven item to start.

[A]

Exactly.

[B]

Going above and beyond all of that. But yeah, you got the backdoor Roth IRA for income's too high for the normal and then you get the mega backdoor Roth 401k which is what he's talking about.

[A]

Yeah.

[B]

Where you can do the after tax contribution and an in plan conversion and we have that at Ramsey. Very few people do it around because

[A]

they're not baby step seven.

[B]

But at that point it's a good option to have. But again to your point, I'd rather have the house paid off first before I'm adding extra to retirement because likely he's going to be a multi, multi, multimillionaire in that retirement account.

[A]

Exactly.

[B]

So in the meantime, till we get there and can access it, let's have a paid off home.

[A]

And because that, that is an element of the typical data point of the typical person in their first one to $5 million in net worth. Now beyond that, people do other things. They don't borrow to do it, but beyond that, they're doing more than just 401k and a paid for house, other rental properties, they've got businesses, they got other things to run a net worth up above that. But so a backdoor Roth. Explain that, George.

[B]

So a backdoor Roth, if your income is too high to contribute to an ira, traditional or Roth, you can do a backdoor Roth ira, which is when you use after tax dollars contributed to a traditional ira and then you pretty much immediately roll it over, convert it to a Roth ira.

[A]

Just did mine the other day.

[B]

Oh, nice. Do it every year before tax season rolls around. It's great. And you can do a spousal as well. And so you can now this year, 7500 bucks. And for you guys, even more.

[A]

We're old. 85, 86. Woohoo. 8600 now it's a good day for that. So I just moved another 17,000.

[B]

That's fantastic.

[A]

And you know, and all the growth on that for the rest of my life will not be taxed and it will not be subject to inherited IRA rules. Not taxed to my heirs.

[B]

So when the grandkids get this money, they're not going, oh, I got to pay taxes on it.

[A]

Nope, Papa Dave did it, have done a Roth. So there we go.

[B]

You can thank him now.

[A]

And so everything in My name is 66 or 65 is in a Roth. And so that's the route we're going because it keeps no minimum distributions, no required minimum distributions at 72 and a half. 74 and a half.

[B]

Statistically, you and Sharon are going to live into your 90s if you made it this far.

[A]

Well, that's a lot of time as well beyond that, but we'll see.

[B]

I think sheer willpower and spite, Dave will outlive us all. That's my greatest fear.

[A]

I'll be on here spreading hate and dissension long after the rest of you are gone.

[B]

104 years old. They're still on the air.

[A]

Get out of debt, sell.

[B]

I've always said he's the Methuselah of personal finance.

[A]

Sell the truck.