Dave Ramsey Calls Social Security A '-4% Return' —But This Wealth Expert Says That's A Dangerous Oversimplification That Could Cost Thousands

When Dave Ramsey speaks, people listen—and jabs at Social Security draw plenty of attention. Back in February, Ramsey slammed the system, sarcastically praising the government for convincing people to give up part of their paycheck in exchange for what he calls a "-4% return." But one financial adviser wasn't having it—and he offered a sharp rebuttal.

"Only the Government Could Make That Work"

Ramsey called Social Security a "sacred cow" and mocked people for defending a system he says delivers poor returns.

But Colin Exelby, a Virtual Financial Advisor at Celestial Wealth Management, with almost 50,000 subscribers on YouTube, argued that blanket statements like that can be dangerously misleading. With over 20 years in the field, he stressed that personal finance is personal, and sweeping generalizations rarely help real people.

The Real Issue Got Drowned Out

The heart of the clip featured a 61-year-old caller named Tracy, who asked when he should start collecting Social Security. He didn't need the money right away but wondered if he should claim early and invest it.

Ramsey gave his usual "wait as long as possible" advice—but missed a key point: Tracy is still working. That means claiming early could not only shrink his monthly benefit but also trigger further reductions due to income limits. In 2025, workers aged 62–66 earning over $23,400 risk losing $1 in benefits for every $2 above the limit.

Let's Run the Numbers

Exelby offered a scenario: if Tracy earns $80,000 and is eligible for $2,500 a month at 62, his actual benefit could drop to just $1,700 a year after reductions—barely 10% of the original amount. Filing early to invest under those conditions? Probably not a smart move.

He also reminded viewers that withheld benefits are credited back at full retirement age. So early filing while working often backfires.

See Also: 65-Year-Old With $110K Saved Asks If He Can Retire in 7 Years — Dave Ramsey Says ‘You Have No Money’ and Tells Him to Stop 401(k) Contributions

Ramsey's 12% Argument? Too Optimistic

Ramsey claimed that investing early Social Security checks could grow into a hefty nest egg—assuming a 12% annual return. Exelby ran the numbers: yes, Tracy could end up with $720,000 by age 84.

But drop that return to a more realistic 5%, and the money runs out by age 83—right around average life expectancy. And that's assuming no market hiccups. A few rough years early on could derail the whole plan.

Don't Forget Taxes

Ramsey also skipped over a key issue: taxes. Up to 85% of Social Security income can be taxed, depending on total earnings. Investment gains aren't tax-free either. That cuts deeply into potential returns—and changes the math dramatically.

Two Big Assumptions

For Ramsey's plan to work, you'd need to:

1. Invest every penny of your benefit without spending any of it.
2. Assume zero taxes on your income and investment gains.

Not exactly realistic for most people.

Bottom Line

Exelby's message? Ramsey isn't entirely wrong—but his advice isn't right for everyone either. Social Security decisions depend on income, taxes, timing, and market conditions. There's no one-size-fits-all solution—context matters.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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