Data Shows Dave Ramsey is Dead Wrong About When to Claim Social Security

"Both on podcasts and on the Ramsey Solutions blog, the financial expert has expressed a consistent preference for the claiming age that he believes is the right one. Unfortunately, the data does not back up his recommendations. In fact, it shows that Ramsey is very wrong about the best age to start your Social Security checks. Following Ramsey's advice on this issue could turn out to be a costly mistake, so it's worth looking at what the research actually shows compared to what Ramsey suggested."

"Ramsey advised his readers and listeners to claim Social Security at 62. There were a few different justifications for this decision: He suggested that you should claim early and, if you don't need to use the money immediately, invest it because the returns you earn from investing could give you more money than you'd get if you waited to claim benefits and the government increased your check because of the delay."

"Since 62 is the earliest age when you can start your payments, Ramsey is advising you to make a decision that would result in the maximum possible early filing penalties. These penalties reduce benefits for each month you claim them before your full retirement age. He is also suggesting you should give up the delayed retirement credits that you can earn when you delay your Social Security benefits claim beyond your FRA."

Claiming Social Security at age 62 produces the largest possible early-filing reductions and forfeits delayed retirement credits. Early claiming imposes monthly penalties that lower benefits, leading to about a 30% reduction if full retirement age is 67. Suggestions to claim early and invest assume investment returns will overcome benefit reductions and that beneficiaries will die younger, but empirical data does not support those assumptions for most people. Delaying benefits increases monthly payments via delayed retirement credits and generally improves lifetime income outcomes for many claimants, especially those reaching or exceeding average life expectancies.

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