Concerns expressed by numerous US financial experts have been echoed by a retired factory worker who has offered a dire warning against depending on Social Security for retirement.
Social Security, which was established almost a century ago to fight pervasive poverty and give older Americans a safety net, is currently facing existential challenges.
According to Dave Ramsey, relying solely on Social Security as your retirement plan is a “recipe for disaster.”
According to Ramsey, the scheme was intended to serve as a supplement—the “cherry on top” of a more comprehensive financial plan—rather than to fully support retirement.
According to 66-year-old Buzz Baxter, his own experience demonstrates the argument.
“Costs for items like property taxes can increase faster than inflation,” Baxter told the Daily Mail, adding that many Americans are unaware of how quickly basic expenses might surpass fixed retirement income.
As a homeowner, you could have to pay for appliances, HVAC, roofing, electricity, and water heaters. Even the removal of trees is becoming very expensive.
Buzz Baxter cautioned that the cost of necessities can quickly surpass limited retirement income.
According to Dave Ramsey, relying solely on Social Security as a retirement plan is a “recipe for disaster.”
After serving as an operations manager at a car manufacturing facility that served major automakers, Baxter retired in 2023.
“We had no credit card debt, and we made sure to replace appliances and the roof before retiring,” he said, adding that he and his spouse had less than $200,000 in savings but were debt-free when they retired.
Nevertheless, their financial situation underscores an increasingly prevalent reality: a huge number of seniors lack sufficient nest eggs to sustain a long retirement.
The couple now mostly depends on their joint monthly Social Security income of $3,986.
Baxter records their attempts to stay under that restriction in videos that he uploads to his YouTube account, viewing retirement as akin to a financial experiment.
“We can make this work if Mrs. Baxter and I can keep our expenses below our Social Security income, which is all we have,” he stated in a recent video.
Before retiring, he tracked every expense for months in order to get ready, which he now strongly advises.
Buzz Baxter tries to balance cost and convenience when it comes to daily expenses. “Anytime I spend money, I enter it right away so I don’t forget… you want every dollar accounted for,” Baxter said on YouTube. “Food, medical insurance, and property taxes are three of the top expenditures,” he told this website.
He did, however, add that they have taken action to control some of these expenses.
For instance, the pair has had a universal life insurance policy since they were young, which Baxter claims adds security, especially since the death of one spouse would eliminate around half of their Social Security income.
Additionally, they have made every effort to lower other fixed costs.
A safe-driving app keeps auto insurance premiums cheap, Medicare expenditures are predictable, and the pair looks for the best prescription medication plan every year.
According to Baxter, people make an effort to balance cost and convenience when it comes to daily expenditures.
They acknowledge that although cable can be costly, it is easier than juggling several streaming platforms, so they continue to pay for phone, internet, and cable services.
Now, Buzz Baxter and his spouse are mostly dependent on their joint monthly Social Security income of $3,986.
Their most variable costs continue to be groceries and eating out.
Due to restocking, the couple’s grocery prices were greater than normal in a recent month. To control expenses, they shopped at wholesale stores like Costco and Sam’s Club.
The couple spent $3,250 in a recent month, leaving $736 in surplus.
However, that buffer is brittle. In certain years, we had deficits and had to take money out our reserves. In his video, Baxter stated, “We’re ahead this year, but this is still an experiment.”
Although it is possible to reduce groceries or subscriptions, Baxter cautions that the true financial strain comes from inescapable expenses. “You shouldn’t just sit still – you need to make changes if you can… because costs keep rising,” he said on YouTube.
In his interview, he added that even meticulous budgeting can be swiftly derailed by growing property taxes, insurance, and home repairs.
Buzz Baxter cautions that even meticulous budgeting can be swiftly derailed by rising property taxes, insurance, and house maintenance. “Not being honestly prepared is the biggest hardship,” Baxter said.
“The majority of it is straightforward maths: the difference between your income and expenses.”
A wider worry among financial experts is reflected in Baxter’s experience.
Dave Ramsey has frequently cautioned that Social Security usually only replaces a part of income, which is insufficient to support most lifestyles. If financing difficulties are not resolved, future payments may even be lowered.
This implies that retirees who rely solely on it may experience severe deficits.
Baxter, like many Americans, does not have a pension, which he claims is becoming more and more common. “Pensions are a dinosaur in the US,” he stated. “The majority of people should be interested in 401(k)s.”
Without that extra source of income, retirees will have to rely more on Social Security and savings, which will put them under more financial strain.
“Young people have the ability to invest money with a click on their phone,” Baxter said. “Invest even a few dollars from every pay cheque into a low-cost index fund – set it and forget it.” Baxter feels that younger people have more tools than ever to avoid these difficulties, but they must act early.
“You should have some savings or work a part-time job if you have no savings,” Baxter said, acknowledging that Social Security alone could not be sufficient in the long run, even with careful planning.
Many retirees are now dealing with this reality.
According to Baxter, the dangers of depending just on Social Security are evident, including growing expenses and unknown future payments.
His story, supported by cautions from professionals like Ramsey, emphasises a straightforward but important lesson: Make plans ahead of time, accumulate funds, and avoid relying solely on one source of income.
“It’s simple maths,” he says.
