Dave Ramsey warns Americans on a major social security problem

Dave Ramsey issues a serious warning about Social Security’s future stability.

Nearly 72.9 million Americans received Social Security benefits in 2024, while approximately 171 million American workers contributed Social Security taxes.

Dave Ramsey, the best-selling author on personal finance, has a strong caution against the federal program. He wants people to know what Social Security is and what obstacles they may face in the future.

In order to give elderly Americans, people with disabilities, and the surviving family members of a deceased breadwinner financial security, the Social Security Act was passed into law in 1935.

NASHVILLE, TN – OCTOBER 29: Dave and Sharon Ramsey

Depending on their salary, workers automatically withhold Social Security from their paychecks.

However, the Social Security Administration (SSA) does not hold the tax money for the individual’s future needs. Current recipients are paid by the Social Security Administration (SSA), which aggregates the money currently collected by those taxes.

Ramsey warns Americans who are currently working and paying these taxes to be mindful of some crucial information.

In 2023, each Social Security claimant had 2.7 covered workers, according to an SSA information page. That figure will drop to 2.4 by 2035.

This is primarily due to the fact that millions of baby boomers will retire during the next ten years.

Furthermore, according to Ramsey, the Social Security trust funds are only worth enough to cover the program’s whole cost through 2034. Beneficiaries will only receive 80% of their existing anticipated monthly payments until legislation is passed.

Ramsey expressed his uncertainty about the future of Social Security. “Something’s wrong with this picture, people!”

Future retirees are reminded by the presenter of The Ramsey Show that Social Security was never meant to be sufficient to support a person’s whole retirement.

Social Security should be seen as a helpful addition to retirement funds, which can be strengthened by utilizing tax-advantaged IRAs and employer-sponsored 401(k)s while one is still employed.

Regarding the importance of starting retirement savings early, Ramsey offers one further caution.

In contrast, the national poverty level is $20,440 for a household consisting of two people.

“Listen, if your plan is to depend on the government to help you retire with dignity, then you need a new plan,” he stated.

Employees who are investing for retirement frequently discover that they must continue to work and save long into their sixties. People can start receiving Social Security payments at age 62, but the longer they wait, the more they will receive each month.

People who retire later have more time to invest and save in their last years of employment.

Others, however, discover that other circumstances compel them to begin receiving Social Security payments sooner, despite their intention to work and save until they reach their full retirement age, which for most people is 67 years old.

For instance, one may suffer from an unexpected medical problem or get laid off from their job.

The last year to be eligible for Social Security benefits—age 70—is a time when many healthy Americans can continue to work. Furthermore, the monthly benefits are significantly greater than what they would have received if they had begun receiving Social Security at age 67.

Continuing to work while getting Social Security payments is an additional choice.

However, there is a crucial consideration: payments are cut by $1 for every $2 earned over a set threshold (in 2024, that was $22,320).