Transitioning from a steady paycheck to relying on retirement income can be daunting — and personal finance expert Dave Ramsey says that for many Americans, Social Security may not offer what they’re counting on. In his latest remarks, Ramsey explains why retirees need to be realistic about what Social Security can and cannot provide.
Social security statistics
Based on data from the Social Security Administration, there were 2.7 workers paying into Social Security for every retiree receiving benefits in 2023. That number is expected to fall to 2.4 by 2035 as more baby boomers begin collecting benefits. Ramsey warns that the system is under pressure, and current projections show the Social Security trust fund will only be able to pay full benefits through 2034.
Social security’s original goal
Ramsey reminds Americans that Social Security was never designed to be the sole source of income in retirement. Instead, it was created to supplement personal savings, not replace them. While Social Security may still play a role, its benefits are through current workers’ payroll taxes, and eligibility depends on earning at least 40 credits. Most people hit that credit milestone after 10 years of consistent work.
Where to focus on saving
In his view, retirement should primarily be funded through assets like 401(k)s and IRAs. These vehicles provide more control, and ultimately, a more secure retirement plan than relying on the uncertain future of Social Security.
When to collect social security
While Americans can begin collecting Social Security at 62, Ramsey cautions that doing so comes with reduced monthly payments. Your full retirement age is based on your birth year — for those born in 1960 or later, it’s age 67. Ramsey encourages future retirees to understand the trade-offs between claiming early and waiting longer. Timing can impact lifetime benefits, so it’s crucial to make informed decisions based on both personal health and financial needs.
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Author: Isabella Torregiani
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