Dave Ramsey warns Americans on Social Security | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Making the shift from regular employment income to retirement can feel overwhelming for many Americans.

Money matters often loom large during this phase, as Social Security payments by themselves typically aren’t enough to cover everyday costs with ease.

To maintain financial security, retirees frequently depend on personal savings and investment accounts — such as 401(k)s and Individual Retirement Accounts (IRAs) — to supplement their income and make ends meet.

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Bestselling personal finance author and radio host Dave Ramsey cautions Americans on key points regarding Social Security and the federal program’s long-term viability.

According to a fact sheet from the Social Security Administration, there were approximately 2.7 active workers funding the system for every individual receiving benefits in 2023.

This support ratio is expected to drop to 2.4 by the year 2035, primarily because millions of baby boomers will reach retirement age over the next ten years.

Ramsey raises concerns about the long-term viability of Social Security, warning that its trust funds are projected to fully support benefit payments only through 2034.

Without action from lawmakers, future recipients may see their monthly benefits drop to about 77% of what they currently expect.

He points out that Social Security was never intended to be the sole financial lifeline for retirees. Rather, it’s meant to complement other retirement savings strategies, such as investing in employer-sponsored 401(k)s and utilizing tax-advantaged Individual Retirement Accounts (IRAs) over the course of one’s working years.

Ramsey also underscores the importance of starting retirement savings early, noting that proactive planning is key to securing financial stability in later life.

Dave Ramsey speaks with TheStreet about personal finance. The bestselling author and radio host explains important views on Social Security for Americans.

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Dave Ramsey bluntly speaks on Social Security

Ramsey outlines how the Social Security benefit system operates.

He notes that future retirees — assuming the program remains intact — will receive benefits funded by current workers through payroll taxes. However, to become eligible, individuals must first pay into the system and accumulate what are known as Social Security “credits.”

Ramsey explains that at least 40 credits are required to qualify for retirement benefits. Fortunately, this milestone is achievable for most workers.

More on retirement:

In 2024, one credit was earned for every $1,730 of income, with a maximum of four credits available each year. That means earning $6,920 in a year, with Social Security taxes applied, secures the full four credits.

Most workers, Ramsey says, reach the 40-credit threshold after roughly ten years of consistent employment. For those still early in their careers, he emphasizes the importance of starting now — getting to work and building toward a stable retirement future.

Dave Ramsey discusses Social Security, 401(k)s, IRAs

Ramsey emphasizes that retirement planning should center on personal investment accounts rather than relying heavily on Social Security.

Vehicles such as 401(k)s and IRAs, Ramsey writes, ought to serve as the cornerstone of an individual’s retirement strategy, providing the bulk of income during retirement years.

He explains that individuals can begin collecting Social Security retirement benefits as early as age 62, regardless of whether they continue working.

However, he points out that claiming benefits before reaching one’s designated full retirement age results in reduced payments.

Ramsey highlights the fact that the full retirement age depends on birth year — for those born in 1960 or later, it is set at age 67. He urges workers to understand how timing affects benefit amounts so they can make informed decisions about when to retire.

Dave Ramsey acknowledges that one of the biggest dilemmas new Social Security recipients face is deciding when to start collecting benefits.

People often wrestle with whether to claim a reduced payment early or wait until full retirement age — or even later — for a larger monthly check. Ramsey emphasizes that this decision carries weight, noting that once benefits begin, the choice is generally irreversible.

He advises that, for many individuals, it’s often wiser to begin receiving payments sooner rather than postponing.

His reasoning is straightforward: Maximizing one’s time with Social Security funds while a person is still still alive can be the smarter move.

“Retirement payments die when you die,” Ramsey wrote. “You might as well take the money and make the most of it while you can.”