Dave Ramsey sounds alarm on Social Security problem

As millions of working Americans grapple with the reality that retirement is approaching — either in the short- or long-term future — they begin to focus on a few inescapable facts.

One is that they need to be sure they are saving enough money out of their paychecks to fund a source of income after they are no longer working. This is often handled through employer-sponsored 401(k) plans and Individual Retirement Accounts (IRAs), according to the Internal Revenue Service (IRS).

Another is the importance of ensuring that their healthcare is sufficiently covered during retirement. This typically involves gaining a comprehensive understanding of Medicare enrollment and its application to individuals within a given household, explains the Centers for Medicare and Medicaid Services (CMS).

Related: Dave Ramsey has blunt words on Americans' 401(k)s, IRAs

And a big concern is Social Security.

Dave Ramsey, host of The Ramsey Show and bestselling personal finance author, emphasizes that it's crucial to understand several vital realities surrounding the collection of benefits from the federal program for retirees.

"Let’s talk definitions first," he wrote on Ramsey Solutions. "Social Security benefits are simply payments made to you when you retire or become disabled."

"These payments are designed to help replace some of the income folks lose when they retire or can’t work anymore because of a disability. Benefits could also be paid to your spouse, children and other qualifying family members when you die."

Dave Ramsey warns Americans not to rely on Social Security

Because the average monthly Social Security paycheck for a retired worker is only about $2,000, according to the Social Security Administration (SSA), Ramsey strongly advises that people do not think of it as a sole source of retirement income.

"These payments were always meant to replace some of your income in retirement — not all of it," Ramsey wrote. "If you're still working, it’s up to you to secure your retirement future."

Ramsey believes a 401(k) with matching employer contributions and a Roth IRA (where taxes are paid upfront, allowing tax-free withdrawals in retirement) are key tools for accumulating wealth during one's working career.

Relying too much on Social Security is a problem.

"Your 401(k) and Roth IRA should be the foundation of your retirement plan and your main source of income in retirement — not Social Security," he wrote.

Dave Ramsey says Social Security is in trouble

Ramsey warns Americans not to count on receiving the full amount of their expected Social Security benefit.

That is because the Social Security Old-Age and Survivors Insurance (OASI) trust fund is only projected to be fully funded until 2033, according to the Social Security Administration.

"At that time, the fund’s reserves will become depleted and continuing program income will be sufficient to pay 77 percent of total scheduled benefits," the SSA explained.

Without legislative action to fix this problem, that would result in monthly Social Security paychecks that are 23% less than people are currently projected to receive.

More on personal finance:

• Dave Ramsey warns Americans on critical Medicare mistake to avoid
• Finance author sends strong message on housing costs
• Scott Galloway explains his views on retirement, Social Security

"What’s the bottom line?" Ramsey asked. "In its current state, the Social Security system is a mess — and you shouldn’t count on an inept government to fix it. If by some miracle Social Security is around when you retire, you’ll have some extra money to work with."

"But understand, it’s your job to take care of you and your family, not Uncle Sam’s."

Dave Ramsey's key takeaways on Social Security

• Social Security is a federal program that delivers financial support to retirees, individuals with disabilities, and families of deceased workers.
• Retirement benefits can be claimed beginning at age 62, though payments are reduced if taken early. Waiting until full retirement age or beyond results in higher monthly benefits.
• In 2025, the average monthly retirement benefit was near $2,000, which equals $24,000 annually. For comparison, the poverty threshold for a two-person household was $21,150, according to the Department of Health and Human Services.
• Social Security is designed to cover only part of a person’s income. Building financial security requires consistent saving and investing over the long term.
• Current projections show Social Security funding lasting until 2033. After that point, available funds are expected to cover about 77% of scheduled benefits.

"No matter how much or how little you expect to receive from Social Security, you need to start saving for retirement right now," Ramsey urges.

"Retirement isn’t an old people thing. It’s a smart people thing."

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