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There’s a reason older Americans are often advised to wait until age 70 to claim Social Security. While it’s possible to start getting benefits as early as age 62, waiting until age 70 guarantees larger monthly checks for life.
Given that many Americans sorely lack retirement savings, it’s pretty common for people to end up with only Social Security for income later in life. So the larger those benefits are, the less financial struggle might ensue.
But while it’s easy enough to follow the logic behind claiming Social Security at 70, financial guru Dave Ramsey does not agree with that advice. Instead, he thinks the typical retiree should claim benefits at 62. Here’s why.
It’s a matter of longevity and risk
Dave Ramsey is someone who tends to advocate financial security and independence. Based on that, you’d think he’d be a fan of claiming Social Security at 70 for the largest possible monthly checks.
Instead, Ramsey thinks 62 is an optimal Social Security filing age. And part of the reason boils down to longevity and risk.
As Ramsey has said himself, Social Security dies with you. Filing for benefits at age 70 only works out financially if you live long enough to make up for many years without collecting those monthly benefits. Since there’s no guarantee of that happening, Ramsey doesn’t think claiming Social Security at 70 is wise.
There’s the opportunity cost, too
There’s another issue with claiming Social Security at 70 — opportunity cost. Ramsey is pretty convinced that claiming Social Security at 62 and investing the money could yield more wealth than waiting to file for benefits and securing larger monthly checks.
Also, for many people, the ability to wait until 70 to claim Social Security hinges on having other income. But it can be argued that tapping retirement savings during your 60s to wait on Social Security could result in less total income compared to leaving those retirement accounts to continue growing.
It’s a personal choice
All told, it’s easy to see why Ramsey doesn’t support filing for Social Security at 70. But that doesn’t mean it’s a bad idea for you.
It may be that your health is great and you have a family history of longevity. In that case, filing at 70 could result in more lifetime income for you.
Rather than follow any expert’s guidance, think about your personal situation. Ask yourself how dependent you expect to be on Social Security in retirement and what you intend to use the money for.
If you’re nearing retirement without any money in personal savings, claiming Social Security at 70 could help make up for that shortfall. Or, to put it another way, if you don’t have savings and you sign up for Social Security at 62, chances are, you’re not going to invest the money. Rather, you’re going to spend it because you have no choice. So if you can keep working until 70 and file then, that may be a smart move.
Either way, the key is to make sure that your filing choice is customized to your needs and goals.