"He wants retirees to claim benefits at 62 and invest the money. This is a sharp departure from standard advice on claiming Social Security as late as possible in order to maximize the monthly income that you receive in retirement. While there are some potential risks to this approach, it can also have a lot of merit"
"If you start benefits at 62 rather than waiting until your FRA, then you are hit with early filing penalties. Anyone born in 1960 or later has an FRA of 67, so a claim at 62 would be five years ahead of schedule. As a result, it would result in a 30% cut to benefits. However, Ramsey isn't worried about that when he suggested starting payments early because of the fact that he wants you to invest the money."
Claiming Social Security at 62 yields immediate payments but permanently reduces monthly benefits compared with waiting to full retirement age. For people born in 1960 or later, full retirement age is 67, and claiming at 62 produces roughly a 30% reduction. Early filing reduces benefits by 5/9 of 1% per month for the first 36 months and 5/12 of 1% per month thereafter. Investing the early benefits in high-performing mutual funds or other vehicles could potentially produce returns that exceed the additional lifetime benefit from delaying claims, but this strategy requires investment skill and tolerance for market risk.
Read at 24/7 Wall St.
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