It’s safe to say that financial guru Dave Ramsey is no fan of Social Security, having called the program a “stupid thing” and a “mathematical disaster” that “robbed” him of money for decades.
It’s no surprise that Ramsey goes against conventional wisdom on the age at which folks should claim Social Security benefits.
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GOBankingRates dug a little deeper into Ramsey’s thoughts on when you should start cashing in on your Social Security check!
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Ramsey says it’s fine to collect benefits as early as age 62 — something most financial experts advise against — if you take your checks and invest them. He claims that doing so will give you a greater return than you would get by waiting until a later age to apply for Social Security, which means you get a bigger monthly check.
“It usually makes sense to take it early if you’re going to … invest every bit of it,” Ramsey said in a 2019 podcast.
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Ramsey was responding to a question from a listener about whether it made more sense to collect Social Security at 62 or wait until full retirement age, which is either 66 or 67 years old, depending on your birth year.
The way Social Security is set up, the longer you wait to collect retirement benefits, the higher your monthly payment. Claiming benefits at age 62 means you will get the smallest possible check. Your check rises yearly past age 62 if you wait to collect.
When you hit full retirement age you get the full benefits due based on the Social Security payroll taxes you contributed while working. The highest payment comes when you file at age 70, after which there is no more financial advantage to waiting.
Waiting until you are 70 years old to claim Social Security could boost your finances by more than $182,000, according to a recent study conducted by David Altig of the Federal Reserve Bank of Atlanta, Laurence Kotlikoff of Boston University and Victor Yifan Ye, a research scientist at Opendoor Technologies.
On the other hand, if you decide to collect as soon as you turn 62, you’ll receive a significantly reduced (by 30%) benefit for the rest of your life vs. waiting until full retirement age.
But according to Ramsey, you can more than make up for those shortfalls by applying for Social Security at 62 and then putting all of your checks into a “good mutual fund.”
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