As American workers approach retirement, many naturally worry about how Social Security monthly paychecks will support them financially in maintaining their desired lifestyle post-career.
Dave Ramsey, bestselling author and radio host, warns retirees about an important financial reality they will encounter when they begin receiving their Social Security benefits and withdrawing money from their 401(k) and IRA (Individual Retirement Account) savings.
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Established in 1935, Social Security was designed to offer financial assistance to retired workers, individuals with disabilities, surviving family members of deceased workers, and dependents of beneficiaries.Â
In 2023 (the most recent year for which these figures are available), approximately 180 million workers contributed to Social Security through taxes, while roughly 67 million Americans received benefits, according to the Social Security Administration (SSA).
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Social Security monthly paychecks are not intended to serve as a primary income source in retirement — rather, they function as a supplemental aid, covering only a fraction of what retirees may need to sustain their lifestyles.
In 2025, the average monthly Social Security paycheck was about $1,980, which works out to an annual total of $23,760. That is up only slightly from a monthly average of $1,907 ($22,900 yearly) in 2024.
That is little more than the 2025 U.S. poverty threshold of $21,150 for a two-person household.
And it’s important to note that without government intervention, the Social Security trust fund reserves are projected to be depleted by 2035, which could lead to reduced payments for future retirees.
Ramsey issued a blunt warning for Americans about Social Security and a word of advice on retirement savings tools such as 401(k)s and IRAs.
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Dave Ramsey bluntly explains a major Social Security financial fact
Because retirees should not rely solely on Social Security for retirement income, it’s important to understand and invest smartly in employer-sponsored 401(k) plans and tax-advantaged IRAs during one’s working years.
Ramsey cites an SSA report that found, without Social Security, four out of 10 Americans 65 years of age or older would live below the poverty line. It plays an important role, but more is needed.
“Listen, if your plan is to depend on the government to help you retire with dignity, then you need a new plan,” Ramsey wrote.
More on retirement:
- Scott Galloway offers bold opinion on Social Security
- Dave Ramsey bluntly warns Americans about retirement
- Tony Robbins sends strong message on 401(k)s
The Social Security Administration’s findings indicate that nearly half of Americans aged 65 and older reside in households where Social Security benefits account for at least 50% of their total family income.Â
Also, around one in four senior households depend on these benefits for 90% or more of their income.
Ramsey advises American workers to adopt a financial approach that boosts their retirement savings and investment portfolio, reducing their reliance on monthly Social Security payments once they retire.
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Dave Ramsey describes key 401(k) and IRA details
Ramsey suggests that people allocate 15% of their income toward retirement savings, specifically by investing in a 401(k) offered by their employer and a tax-advantaged Roth IRA.
A 401(k) allows employees to contribute a portion of their pre-tax earnings into a retirement account, with many companies offering a matching contribution as part of their benefits package. Taking advantage of this match is crucial, as it essentially provides a guaranteed 100% return on the invested funds.
It’s also important to note that 401(k) contributions are subject to annual limits. In 2025, the maximum contribution is $23,500, but for workers aged 50 and older, this cap increases to $31,000 to allow for additional savings.
A Roth IRA is independent of an employer, allowing individuals to contribute after-tax dollars and enjoy tax-free withdrawals in retirement. This makes it a valuable tool for long-term savings.Â
The annual contribution limit for Roth IRAs in 2025 is $7,000, with an increased cap of $8,500 for those aged 50 and older, enabling additional savings as retirement approaches.Â
Roth IRAs also provide more flexibility in investment choices than 401(k) plans.
“It really is the rock star of retirement accounts,” Ramsey wrote.Â
“Roth IRAs are easy to set up, simple to maintain, and come with tax advantages that help you build wealth and boost your retirement savings over the long haul.”
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