Finance expert Dave Ramsey has a warning for Americans who rely on Social Security
Millions of Americans get by with Social Security benefits, but it could be doing more harm than good. At least personal finance expert and bestselling author Dave Ramsey has sounded the alarm for those solely relying on their Social Security payments for retirement. The finance guru's comments come in conjunction with AARP's clarification on the future of the retirement program. Ramsey recently talked about the funding pressures and uncertainty in policy that are making Social Security unreliable for Americans.
Social Security is a federal program that provides protection against risks like old age, unemployment, or disability, through partial income replacement. It is a vital support system for millions of individuals and families during retirement. However, Ramsey has now warned Americans that the long-term solvency of the Social Security trust funds is uncertain, noting that the current projections suggest the fund could be exhausted by 2034-2035.
In his blog, Ramsey acknowledged the risk of the Social Security trust fund running out without the intervention of Congress. In that case, by the time the funds are exhausted, the program would be unable to provide full retirement benefits, as at that point the revenue from the payroll taxes will only be sufficient to pay for 80% of the benefits, he wrote. Ramsey further explained that the insolvency date of the funds has been further accelerated, potentially due to rising benefit expenditures, policy changes, and demographic shifts.
"What’s the bottom line here? We can’t depend on Washington to take care of us in retirement. Do you really want to put your retirement dreams in the hands of the government? Heck no!" Ramsey wrote in his blog.
The program enforces an earnings limit for individuals who begin collecting benefits before reaching full retirement age, which is officially 67 for people born in 1960 or after. The earnings limit is adjusted every year to reflect the changes in average wages, The Street reported, citing AARP. For instance, in 2026, individuals who don't reach the full retirement age will have $1 deducted from their benefits for every $2 they earn above $24,480. This limit was increased from $23,400 in 2025, reflecting a change in average wages. Thus, an individual making $40,000 will see a deduction of $7,760 in benefits.
However, Ramsey explained that this deduction is not lost forever. “Those withheld benefits will be returned to you once you reach full retirement age. At that point, Social Security will re-run your numbers and increase your monthly benefit to make up for the earlier reduction," he wrote. Furthermore, the income from other government or military retirement benefits, interest, pensions, investment earnings, or capital gains isn't counted in the threshold.
It still doesn't make Social Security the only reliable source for income during retirement, according to Ramsey. “Any money you get from Social Security should be considered icing on the cake. But making Social Security the main ingredient of your retirement plan? That’s a recipe for disaster,” Ramsey wrote in his blog, before recommending that Americans start saving and investing for retirement.
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