"Ramsey made his recommendation about Social Security in response to a question about when to claim benefits that was raised on a podcast in 2019. At that time, he suggested that you claim your benefits at 62 and then invest the money. He suggested that this approach could be a better one than just delaying your benefits claim and letting your Social Security checks grow, because he thinks you can earn 10% to 12% average annual returns through your investing."
"With the caveat that you need to invest the money, Ramsey's advice makes a little more sense on the surface. He isn't suggesting that you just claim benefits and spend the money. He believes that you can claim and do a better job investing and growing the funds than if you just sit back, wait, and let your checks increase by avoiding early filing penalties and eventually earning delayed retirement credits if you don't claim Social Security when you first become eligible for it."
A recommendation to claim Social Security at 62 and invest the benefits relies on achieving 10% to 12% average annual investment returns. That approach assumes claiming early and investing yields more than waiting for larger checks and delayed retirement credits. Most people cannot or will not invest reliably at those returns, making the strategy impractical for many households. Early claiming permanently reduces monthly Social Security amounts and can undermine spousal or survivor benefits. Investment risk, lifespan uncertainty, and forgone guaranteed lifetime income make early claiming likely to produce less retirement income for many individuals.
Read at 24/7 Wall St.
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