Personal finance expert and millionaire Dave Ramsey has called out Social Security as a “failure” but still said he would accept payments from the ailing safety net program.
Social Security sends out monthly benefits to seniors during retirement as well as those living with disabilities across the United States. However, recent reports have found the system will run out of money to make full payments by 2033 unless major reform is enacted on the program.
On top of that, many seniors have complained that the cost-of-living adjustments for their benefits do not accurately reflect inflation, and monthly payments can barely keep them afloat during their retirement years. The average Social Security payment for 2024 is roughly $1,767 monthly.
In a Q&A with a reader for Knox News, Ramsey called the Social Security system a “mathematical failure.”
“But that doesn’t mean I’m not going to take my money when I deserve it. The government took it from me in the first place, so I don’t have a problem with accepting something I’ve already paid into,” Ramsey told a reader inquiring about whether they should accept unemployment benefits.
Ramsey went on to say that sometimes collecting unemployment benefits specifically can cause them to “take their foot off the gas.”
“The idea that ‘free’ money is coming in can help them rationalize sitting at home on the couch, instead of working hard to find another job and being extra careful with their finances,” Ramsey said.
But when it comes to Social Security, Ramsey said he and other Americans have a right to collect from the program they’ve been paying into their entire careers.
With an estimated net worth of $200 million, Ramsey has been vocal about his views on the program. He has gone against the grain of other financial advisers and said it’s fine to start taking benefits at age 62, but you should use those checks to make investments and accumulate further wealth.
“It usually makes sense to take it early if you’re going to…invest every bit of it,” Ramsey said in a podcast in 2019.
Claiming at age 62 generally means you get the smallest monthly benefits available compared to waiting until full retirement age, or even delaying until 70, when you’ll get the largest monthly payouts.
Ramsey also previously called Social Security a “broken system” and a “disaster.”
Looking at Ramsey’s comments, Kevin Thompson, a financial expert and founder and CEO of 9i Capital Group, said the Social Security trust fund is set to become insolvent in about a decade, but the system itself has a long lifeline.
“He wants people to save money and pay down debt,” Thompson told Newsweek. “I do believe you should accept benefits. That’s the reason you pay into the system.”
Ramsey’s comments come at the same time there’s been increasing criticism of millionaires and billionaires taking Social Security payments.
A recent poll from Social Security Works found that 71 percent of voters want Congress to protect Social Security by increasing taxes on wealthy Americans.
“It’s really an issue of possible reality versus probable reality,” Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek.
“Dave Ramsey is looking at Social Security though a scenario where it’s increasingly likely the only way the program will sustain itself is through government accruing more debt to do so, and if it doesn’t, the program will be as a whole on the cutting block. That’s why he’s telling his listeners it’s a ‘failure’ and it’s foolish to put your financial future in retirement in Social Security alone.”
Still, there’s some hope that the Social Security Administration will get around its impending money woes.
Because Social Security is still one of the most popular government programs, legislators know imploding the system would “equate to the end of their political careers,” Beene said.
“Social Security certainly could have some issues in the years ahead, but the idea the program won’t somehow be fully funded and continue to support recipients just doesn’t sync with what the voting reality will be,” he said.