Dave Ramsey warns that a third of Americans will learn about Social Security the hard way

A third of Americans will learn about Social Security the hard way.

That’s according to finance guru, Dave Ramsey, who warns that Social Security alone is insufficient, and recommends maxing out 401(k) and IRA savings instead.

By 2034, he says, Social Security’s reserve money is expected to run out if nothing changes. “Depending on what Congress does (or doesn’t do), retirees may have to prepare for the possibility of reduced benefits in the future, and workers may see an increase in Social Security taxes,” Ramsey added.

Bottom line – we can’t count on the government to take care of us in retirement. And to be honest, you don’t want to put your retirement hopes and dreams in the hands of the government. Look, if you get benefits when you retire, that’s great. But if your goal is to make Social Security your main source of income, you’re really setting yourself up for disaster.

Between now and 2027, more than 4 million Americans will turn 65. “More than 11,000 people are reaching this milestone every day. The program’s cash savings are expected to run out in less than a decade,” according to NPR.

It also means that when many people retire, they will find limited resources from Social Security. That being the case, many of us need to figure out how to make the most of our finances for a safe, healthy retirement.

Maximize your contributions to retirement accounts if you can.

Tax-advantaged accounts — 401(k)s, IRAs, health savings accounts, etc. — are great ways to save and invest for the future. In many cases, contributions to these accounts can help reduce your taxable income for the 2025 tax season. You have until April 15, 2026, to contribute the maximum amount to apply to your 2025 taxes.

Also, if your employer offers a matching program, contribute enough to get the highest employer match possible. You can also max out your health savings account if you have one. Let’s say your employer will match up to 6% of your salary; Maximize it.

Consider it. Let’s say you earn $100,000 a year and your employer will match 5% of your salary or 50% of your contribution up to $5,000. By combining your contributions and the employer’s, $7,500 is saved each year. Over 30 to 40 years of that, you will have a solid balance.

Keep extra money on hand for retirement instead of spending it on anything.

If you can, you should set aside 15% of your family income for retirement, Ramsey said.

He recommends investing 15% of gross household income in tax-advantaged retirement accounts (401(k)s, Roth IRAs), building wealth, controlling debt and establishing an emergency fund.

“An example from Ramsey Solutions highlights how people under 40 can save $1 million for retirement. If someone is making $80,000 a year, he needs to invest $1,000 a month to reach that 15%. Putting it in a “good growth stock mutual fund” can add up to more than $1.5 million over the next five years. $2.8 million,” Benzinga.com added.

For most of us, getting out of debt is easier said than done.

According to Dave Ramsey, focus on small balances first. This way, you free up more cash for heavy debt. So, once the smaller loans are paid off, you now have new cash flow to make additional payments on the higher interest balance.

Then, as noted by Ramsey Solutions, “Make the minimum payment on all but the smallest debt—throw as much money as you can into that debt. When that debt is gone, take its payment and apply it to another smaller debt (while continuing to make minimum payments on your other debts).”

Then, repeat until you drive down your overall debt.

Or, you can make minimum payments on all your loans and put a portion toward expenses with more interest. Or three, you can take out a consolidation loan, erase all outstanding debt, and have a balance. Not only does this allow you to manage your debt a little better, but it can also allow you to keep extra funds in an emergency account.

For more than a decade, investment advice aimed at everyday Americans followed a familiar script: automate everything, keep costs low, and don’t touch a thing. And, increasingly, investors are realizing this Being completely hands off also means being completely disconnected.

That feeling hits like a lightning bolt when you don’t realize how good your returns could be, but there are amazing offers like an app where new self-directed investment accounts can get up to $1,000 in stocks for as little as $50 in funds.

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