Dave Ramsey sends major message on Social Security, 401(k)s, IRAs todayheadline

Social Security, the government program that sends out monthly paychecks to people in retirement to help bolster their finances, is under a significant amount of financial pressure. 

Radio host and bestselling personal finance author Dave Ramsey shares a very short description of what that means for average Americans and offers some important specific details on what people can expect in their retirement futures.

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First, Ramsey explains a few important facts people should know about Social Security and retirement finances. 

For example, the earliest age Americans can claim Social Security benefits is at 62. But the monthly payments when receiving them that early are reduced compared to what they would be at their full retirement age (which is 67 for most people).

Related: Dave Ramsey warns Americans on Social Security, Roth IRA, 401(k)

For those claiming at age 70, Social Security benefits are at their highest monthly value. So people in good health that choose to wait that long can benefit from that decision.

And the average monthly Social Security payment, totalling about $1,900, amounts to around $23,000 per year. That’s barely above the 2025 poverty line of $21,150.

Those facts add to concern among future Social Security recipients about what exactly is in store for them when they reach retirement age.

Dave Ramsey explains Americans’ Social Security future in one word

Ramsey makes a point about Social Security that is important to understand  — and he explains it in one word.

“Unpredictable,” he wrote. So why does the personal finance radio host and author explain it that way, and that fast?

Social Security’s future, in the minds of many workers, is a matter of great concern, Ramsey says. Many worry how much of their expected benefits will be around and ready to help pay for their lifestyle needs after they retire. 

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That’s because the federal program is partially based on trust funds that will, without lawmaker action, be depleted by 2034. And that would have the effect of impacting Social Security recipients’ monthly benefits with a reduction to about 80% of their currently expected values.

Social Security monthly payments, as previously noted, are not to be expected to completely cover one’s financial needs in retirement.

Rather, as Ramsey points out, the best way to build one’s retirement nest egg is through long-term saving and investing. This is often successfully accomplished with employer-sponsored 401(k) plans and tax-advantaged Roth IRAs. 

Related: Dave Ramsey raises red flag over Social Security

Dave Ramsey has blunt words on Social Security, 401(k)s and Roth IRAs

The Social Security Administration breaks down the funding difficulties with a few important facts. 

Right now, 2.7 workers share costs to cover one Social Security recipient’s monthly benefits. That ration will decrease by 2035 to 2.4 workers per beneficiary. 

The number of baby boomer generation retirees will skyrocket by millions during this decade, as the total count of Americans above the age of 65 jumps from 61 million in 2023 to 77 million in 2035.

So Ramsey spells out the bottom line in his widely recognized abrupt way of speaking.

“In its current state, the Social Security system is a mess — and you shouldn’t count on an inept government to fix it.,” he wrote.

That’s why Ramsey strongly advises current American workers to, as soon as they can, contribute to 401(k) plans they are offered by their employers.

And as far as other retirement investments go, Ramsey suggest Roth IRAs. The tax advantages in those accounts are well implementing for successful retirement planning. 

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