One in three Americans will learn Social Security the hard way.
That’s according to financial guru Dave Ramsey, who warns that Social Security alone isn’t enough and recommends maxing out 401(k) and IRA savings.
Social Security reserves are expected to be depleted by 2034 if no changes are made, he said. “Depending on what Congress does (or doesn’t do), future retirees may need to prepare for the possibility of reduced benefits, while workers may see increases in Social Security taxes,” Ramsey added.
The bottom line is – we can’t expect the government to take care of us in retirement. Let’s be honest, you don’t want to hand over your retirement hopes and dreams to the government. Look, it would be great if you had benefits when you retired. But if your goal is to make Social Security your primary source of income, you’re really setting yourself up for something.
Currently, more than 4 million Americans will be 65 or older between now and 2027. According to NPR, “More than 11,000 people reach this milestone every day. The program’s cash surplus is expected to be exhausted in less than a decade.”
It also means that as more people retire, they will have limited resources from Social Security. In this situation, many of us need to figure out how to make the most of our finances to have a secure, healthy retirement.
If you can, maximize your contributions to retirement accounts.
Tax-advantaged accounts — 401(k)s, IRAs, health savings accounts, etc. — are a great way 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 pay the maximum amount to apply to your 2025 taxes.
Additionally, if your employer offers a matching plan, contribute enough to receive the highest employer match possible. If you have a health savings account, you can also maximize your use of it. Assume your employer will match up to 6% of your salary; maximize this.
Think about this. Assuming you earn $100,000 a year, your employer will match 50% of your contributions, up to a maximum of 5% of your salary, or $5,000. Save $7,500 per year with your contribution and employer match. Over the course of 30 to 40 years, you will have a solid balance.
Put extra money into retirement rather than just spending it on anything.
If you can, you should set aside 15% of your household income for retirement, Ramsey says.
He recommends investing 15% of gross household income in tax-advantaged retirement accounts (401(k)s, Roth IRAs) to build wealth, control debt and build an emergency fund.
“An example from Ramsey Solutions highlights how someone under 40 can save $1 million for retirement. If someone makes $80,000 a year, they would need to invest $1,000 per month to hit 15%. Putting that into a Good Growth Stock Mutual Fund could bring in more than $1.5 million in retirement savings at age 65. Postponing retirement another five years could bring in $2.8 million,” Benzinga.com adds.
For many of us, getting out of debt is easier said than done.
According to Dave Ramsey, focus on smaller balances first. This way, you can free up more cash to pay off heavier debt. Then, once the smaller debt is paid off, you now have new cash flow to work with to make the extra payments on the higher interest balance.
Then, as the Ramsey Solution points out, “Make minimum payments on all but the smallest debt—put as much money as possible on that debt. Once that debt is gone, apply its payments to the next smallest debt (while continuing to make minimum payments on the other debts).”
Then, repeat this over and over until you lower your overall debt.
Or, you could make just the minimum payments on all your debts and put most of your money into the expenses with the highest interest rates. Or third, you can apply for a consolidation loan, eliminating all outstanding debt and having a remaining balance. Not only does this allow you to better manage your debt, it also allows you to put extra money into an emergency account.
For more than a decade, investment advice for average Americans has followed a familiar script: Automate everything, keep costs low, and don’t touch anything. More and more investors are realizing Total non-interference also means total disengagement.
The realization hits you like lightning when you not only realize how good your returns can be, but also realize that there are some amazing offers out there, like an app that lets you get up to $1,000 worth of stocks for just $50 with a new self-directed investing account.
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