Dave Ramsey, a personal finance expert, warns Americans about the growing problems with Social Security and Medicare. He says that relying on these programs alone for retirement is not enough. The average monthly Social Security payment is less than $2,000.
This means that people need to save and invest in other ways, such as 401(k) plans and IRAs, to have a comfortable retirement. Medicare helps with health care costs, but it does not cover everything. Retirees still have to pay for deductibles, copays, and long-term care.
Ramsey suggests getting long-term care insurance by age 60 and having a Health Savings Account (HSA) to save for medical expenses. Ramsey also thinks that Social Security is a “mathematical disaster.” However, he still says that it often makes more sense to start taking benefits at age 62 instead of waiting until full retirement age.
Dave Ramsey warns on retirement readiness
This is because if you invest the money you get from Social Security early on, it can grow over time and potentially give you more money in the long run. For example, Ramsey says that investing $700 a month from age 62 to 77 could result in over $318,000. This might be better than waiting for larger monthly payments later on.
However, this strategy is risky and not realistic for everyone. Many retirees need their Social Security money right away to pay for basic needs. Most experts recommend waiting to claim benefits if you expect to live a long life, as this will give you higher payments each month.
In the end, deciding when to take Social Security is a personal choice that depends on your situation. Ramsey’s advice is meant for people who have other sources of income and can afford to invest their benefits. For others, it may be better to wait and have a more stable income in retirement.
