Dave Ramsey's Blunt Message About Social Security's Future - And 7 Ways to Protect Yourself

Social Security is in trouble. As things now stand, the Old-Age and Survivors Insurance (OASI) Trust Fund is projected to be depleted by the fourth quarter of 2032. If that happens, benefits would be automatically cut to 78% of the scheduled amounts.

But rather than panic over this situation, financial expert Dave Ramsey suggests you prepare so you can eliminate some stress living on Social Security later. Here are a few steps he recommends.

Treat Social Security as supplemental income

The Social Security Administration (SSA) flatly states that Social Security was never meant to be anyone's sole source of income during retirement.

Ramsey agrees. As the Ramsey Solutions website states, when planning the role of Social Security income in your post-work life, you should "think of it as the little cherry on top of your retirement sundae."

Rather than banking too heavily on Social Security, build a solid nest egg or try to create other sources of income, such as a part-time job or side hustle.

Invest 15% of gross income in tax-advantaged accounts

Ramsey has crafted a list of seven "baby steps" that people can use to take control of their money. Step No. 4 is to consistently invest 15% of your household income for retirement purposes.

Doing so will put you in a much better position if the government cuts Social Security benefits. Just understand that you will need to be patient when building the retirement nest egg.

As Ramsey Solutions says, "There's no such thing as getting rich quick. Slow and steady wins the race."

Build a big retirement nest egg

Ramsey says your nest egg should be big enough to provide you with a comfortable financial ride through your golden years. In fact, he says too many people underestimate both how long they likely will live and how much money they will need.

"They retire broke or way too early," Ramsey told Kiplinger. "It's like jumping out of a plane without checking your parachute."

So, continue to work and save, and don't call it quits until your nest egg is big enough to cover your expenses through a long retirement.

Eliminate all debt before retirement

Ramsey hates debt. He advocates paying off all obligations except the mortgage. That means eliminating credit card debt and any loans you might have.

His famous strategy for paying off debt is known as the "snowball method." With this approach, you pay off the smallest debt you have before turning to the next smallest. You then repeat this process until all debt is gone.

By staying out of debt, your income will go much further during your golden years.

Put money into a health care fund

Medicare does not cover all health care expenses. Such gaps in Medicare coverage likely will require you to engage in some significant out-of-pocket spending when you seek medical care.

For this reason, Ramsey recommends putting money into a health care fund. Specifically, he recommends regularly contributing to a health savings account (HSA) if you are eligible to do so.

Money you contribute to an HSA is never taxed as long as you use the funds to cover the cost of qualified medical expenses. As the Ramsey Solutions website puts it, "If health insurance had a superpower, it would be the HSA."

File for Social Security benefits as soon as possible

Ramsey advocates filing for Social Security benefits earlier rather than later. For most people, eligibility for Social Security begins at age 62.

This position is controversial. Many experts recommend waiting to file until your full retirement age, which is 67 for most folks. Some experts even recommend delaying longer to increase the size of your monthly payout.

But Ramsey begs to differ. When possible, he recommends filing early, then taking the money from your Social Security benefit and investing it in the stock market.

As the Ramsey Solutions website states, "After all, you can do a much better job investing that money than the government ever could."

Don't wait for the government to solve the funding problem

Ramsey doesn't mince words about the state of Social Security. He has referred to it as a "broken, screwed up, mathematical disaster."

Rather than hoping the government will fix the problem, Ramsey urges you to take full responsibility for properly funding your retirement.

As he has said, "You are the CEO of your retirement." So if you have not gotten around to saving properly for retirement, now is the time to change your ways.

Bottom line

Ramsey and his team say depending too heavily on Social Security is "a recipe for disaster."

As the Ramsey Solutions website states, "We can't depend on Washington to take care of us in retirement. Do you really want to put your retirement dreams in the hands of the government? Heck no!"

The people most exposed to shrinkage of the Social Security trust fund are those who built their retirement plan around Social Security. The antidote is independent savings discipline, not political optimism.