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There are some tough decisions you might have to make in the context of your retirement. When should you start withdrawing from your IRA or 401(k)? What type of Medicare plan should you get? And when should you begin collecting Social Security benefits?
The latter decision carries a lot of weight. Although the monthly Social Security benefits you’re entitled to as a retiree are based on the amount of money you earned during your career, your filing age also helps dictate how much the program pays you each month.
The earliest age you can claim Social Security is 62. If you want your monthly benefits without a reduction, you’ll need to wait until full retirement age (FRA) to sign up. FRA is 67 for people born in 1960 or later.
You can also delay your Social Security claim beyond FRA. For each year you do, your benefits grow 8%, up until your 70th birthday.
Given that Dave Ramsey is someone who encourages people to do what they can to attain financial security, you’d think he would be a fan of filing for Social Security at 70. That allows you to score the maximum monthly check.
Surprisingly, though, Ramsey has different advice when it comes to Social Security. And while it’s pretty controversial, it could potentially work for you.
Dave Ramsey says this is when you should claim Social Security
Dave Ramsey generally doesn’t think claiming Social Security at age 70 is a good idea. Believe it or not, he’s a fan of filing for benefits at age 62, despite the fact that doing so causes a permanent reduction on a monthly basis.
Ramsey’s logic is pretty simple: Social Security dies with you. The more months you’re able to collect a benefit, the more money you might get out of the program. So it pays to start receiving that money as early in life as possible.
That said, Ramsey’s advice comes with a caveat. He thinks filing for Social Security early makes sense if you then take the money and invest it. If you’re not going to do that, then you may not come out ahead financially by claiming benefits early.
Is claiming Social Security at 62 right for you?
Although Ramsey makes a good argument for claiming Social Security at 62, you’ll need to see if that’s a wise choice based on your personal circumstances. You may want to consider filing for benefits at 62 if:
- You have plenty of retirement savings, and reduced benefits won’t mean you can’t pay your bills
- Your early claim could help you retire early and escape a job that’s bad for your health
- You have poor health and don’t expect to live a long life
But you may want to claim Social Security at a later age if:
- You don’t have much money saved for retirement
- You like your job and have the option to keep at it well past age 62
- Your health is great and you have a family history of longevity
- You have a spouse who’s likely to outlive you, and you want them to have larger survivor benefits from Social Security
Ramsey’s advice on Social Security is certainly worth considering. And even if you don’t plan to invest the money, taking benefits early could be a smart move for you. But it’s important to understand what filing early means financially, and to make sure you can afford to reduce those monthly checks for the rest of your life.