‘He Doesn’t Pay Taxes, but He Thinks Social Security Will Cover Him’: Ramsey to Woman Whose 62-Year-Old Father-in-Law Retired With Nothing

Angela from Kansas City called The Ramsey Show about a retirement plan that contradicts itself. She said her father-in-law has been “very blunt” that he doesn’t pay taxes. He also expects Social Security to send him a monthly check big enough to cover his bills.

He just turned 62 and hasn’t worked in three months. He has no retirement savings, no 401(k) and no life insurance. He bought a house about five years ago. Angela’s husband is the oldest of six children, and three of them struggle with addiction. Angela wanted to buy a $500 will to keep herself and her husband out of the mess that’s coming.

Dave Ramsey and co-host John Delony gave a blunt opinion on the Social Security plan: “It’s not enough to eat on.” The Social Security Administration’s own numbers back them up, and they point to something worse. If his work was never reported, the plan may pay him nothing at all.

Untaxed Cash Work Earns Zero Social Security Credits

Think of Social Security as a ledger. Your benefit is calculated only from earnings that were reported and taxed, and cash income kept off the books never makes it into the ledger.

To get in, you need work credits. In 2026, one credit takes $1,890 in covered earnings. You can earn at most four credits a year, and retirement benefits require 40. That means a full year of credits takes only $7,560 in reported earnings.

If you’re self-employed, you pay for those credits through the self-employment tax. The rate is 15.3%, which covers both the employee and employer shares. On $7,560 of net self-employment earnings, the tax comes to about $1,157. Federal law requires a self-employment tax return once net earnings reach $400. IRS Publication 554 has a warning. If you skip Schedule SE, “you may not get all the credit to which you are entitled.”

Now run the numbers for a man with zero credits. Starting now and earning four credits a year, he wouldn’t qualify until age 72. Every year he skipped the tax also wiped out a year of credits.

Even His Best Case Pays About $1,450 a Month

Now assume he did report his income for decades. The SSA’s 2026 fact sheet sets the average retired worker’s benefit at $2,071 a month after the 2.8% cost-of-living adjustment (COLA). This comes to $24,852 a year, and Medicare premiums still come out of it.

Taking at 62 makes the check smaller. Full retirement age is 67 for anyone born in 1960 or later. Taking at 62 cuts the benefit by 30%. Applied to the average, that leaves about $1,450 a month for life.

The SSA just announced a 3.6% COLA for 2027, which lifts the average retired worker to $2,170. Each raise is a percentage of the check you already get, so a small check only grows by a little.

His Reported Work History Decides Whether He Gets a Check

Everything depends on what his earnings record shows, so if he earned 40 credits before going off the books, he can take a reduced check now. Its size comes from his highest 35 years of taxed earnings. Every year with zero reported income pulls the number down.

If he never reached 40 credits, he can’t get retirement benefits at all. His fallback would be Supplemental Security Income (SSI), and for someone who isn’t disabled, that starts at 65. The 2026 federal SSI payment is $994 a month for an individual, with a $2,000 resource limit. The home he lives in generally doesn’t count toward that limit.

Shield Your Own Household Before His Money Runs Out

Ramsey and Delony’s advice focused on protecting the next generation. Angela asked whether children inherit a parent’s debt. The answer was “Correct. None does. Zero.” Debts get settled out of the estate. They told her to keep her own name out of his will. They also said her husband should talk to his siblings ahead of time so nobody gets surprised.

Here’s what you can do with any parent, or for yourself:

1. Pull the earnings record. Open a my Social Security account at SSA.gov and check every year of reported earnings. If a year you worked shows zero, you can fix it with W-2s or tax returns, but time limits apply.
2. Count the credits. See whether the statement shows 40. If it doesn’t, figure out how many years of reported work at $7,560 a year it would take to close the gap.
3. Report side income. Any net self-employment earnings of $400 or more go on Schedule SE. Paying the 15.3% tax is how you earn the credits.
4. Compare the estimate. Line it up against real bills. Look up the SSA estimates for taking at 62, 67 and 70 and stack each one against actual monthly expenses. If there’s a shortfall, the family needs to talk about who covers it before the savings run out.

Social Security only pays on income that was taxed, so retiring on untaxed cash work means retiring on nothing.

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