Dave Ramsey Says 35% of Americans Will ‘Learn the Hard Way’ About Social Security

• A good 35% of workers today expect Social Security to be a major retirement income source.

• Financial guru Dave Ramsey has a tough lesson for people in that boat.

• It’s better to save for retirement independently rather than relying on a program whose finances are incredibly unstable.

• A recent study has identified a habit of Americans that doubles their retirement savings and moves retirement from dream to reality. Read more here.

When you retire, you may need less income than you needed during your working years. The reason is that your spending numbers may be lower.

If you buy your home in your 30s and retire in your 60s, you may no longer have a mortgage by the time your career ends. Not making those monthly payments can free up a lot of room in your budget.

Similarly, if you used to spend $200 a month commuting to work, once you retire, you won’t have to bear that expense. And if you and your spouse no longer have jobs to continue saving money as retirees, you may find that you’re able to downsize from a two-vehicle home to a single vehicle.

Still, there’s only so much salary deduction you can spend in retirement, since many of the expenses you faced during your working years will still be in play. You still need to buy food, pay for utilities and cover the cost of healthcare.

That’s why planning to rely heavily on Social Security in retirement may not be such a smart move. While it’s fine to include those benefits in your retirement income plans, relying on them as a major source of income can come back to bite you.

Dave Ramsey is a big advocate of financial security. For this reason, he is passionate about helping people avoid making mistakes that could derail them in retirement.

Recently, Ramsey cited a survey by the Employee Benefit Research Institute, which found that 35% of today’s workers expect Social Security to be their primary source of income during retirement. But Ramsey said, “These 35% of people are going to learn the hard way what they don’t know and it’s definitely going to hurt them when they retire.”

Relying too heavily on Social Security for retirement income is a dangerous move, Ramsey insists. And he’s right for a few reasons.

First, Social Security only replaces 40% of your pre-retirement paycheck if you earn an ordinary wage. Even if you end up with smaller bills in retirement compared to your working years, they may not be 60% smaller.

Second, Social Security faces benefit cuts in the coming years as older workers retire and file claims, putting a strain on the program. Although benefit cuts aren’t set in stone, they could happen in less than a decade if lawmakers don’t find a way to address Social Security’s pending funding shortfall.

For these reasons, Ramsey is right to caution workers against relying too heavily on Social Security. And it pays to follow his advice.

There is no reason to turn off Social Security in the context of your retirement. However, a smart move is to save on your own for retirement so that you are able to cover a large portion of your expenses based on your personal nest egg. From there, use Social Security as supplemental income—not the other way around.

Ramsey emphasizes that people’s financial stability in retirement should not come from Social Security, especially at a time when benefit cuts are likely. So if you want to increase your chances of being able to enjoy retirement without financial worries, be sure to prioritize IRA or 401(k) contributions while you’re working.

Most Americans underestimate how much they need to retire and how prepared they are. But statistics show that there are more than one person with a habit twice Saving those who don’t.

And no, it has nothing to do with your income, savings, clipping coupons, or cutting back on your lifestyle. It’s more straightforward (and powerful) than either. In fact, it’s surprising how easy it is that most people don’t adopt this habit.