Retirement Social Security

Dave Ramsey’s Social Security Advice Sounds Smart - Until You Run the Numbers

Claiming early vs. waiting can reshape your Social Security income.

By David Maina

Edited by Sara Albertelli

Updated Dec. 30, 2025

Dave Ramsey often argues that some people may come out ahead by claiming Social Security at 62 and investing the checks instead of waiting for a larger benefit later. The idea is simple: take the money early and let investments do the work.

Once you claim, your benefit is largely set for life, shaping inflation protection, long-term income, and survivor benefits.

When you account for market risk, taxes, and the value of a guaranteed, inflation-adjusted payment, the math doesn't always favor claiming early and investing the difference.

Here's what that approach looks like in practice, and what it could mean for your retirement plan.

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Ramsey's key Social Security framework

Dave Ramsey often describes Social Security as a supplement, not the core of a retirement plan.

In his view, savings and investments should do most of the work, with Social Security adding extra income on top.

He has argued that, in some cases, claiming benefits at 62 can make sense if the checks are invested rather than spent. The logic is that investing those early payments could produce more total wealth over time than waiting for a larger guaranteed benefit.

This comparison matters because delaying Social Security increases benefits by about 8% per year after full retirement age. Long-term stock market returns have historically averaged more than that, which is why investing early plays a central role in his thinking.

He generally says early claiming works best if you're debt-free, invest consistently, and aren't earning enough to trigger Social Security's earnings limits before full retirement age. In that framework, early claiming is part of a broader, tightly managed financial plan.

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The pitfalls of claiming at 62

One major complication with the "claim at 62 and invest" idea is the earnings test. If you claim Social Security before full retirement age and keep working, benefits can be withheld once your income passes a set limit. In 2026, that cap is $24,480.

Earn more than that, and Social Security withholds $1 in benefits for every $2 over the threshold.

This makes early claiming difficult to pair with ongoing work. While some people do fully retire at 62, many continue working at least part-time.

For them, the earnings test can sharply reduce near-term income, even though those withheld benefits are later credited back after full retirement age.

There is also investment risk to consider. Investing Social Security benefits means exposure to market ups and downs.

If returns are strong, the strategy can look favorable. But if markets decline early on, the outcome can be very different. This is often described as sequence-of-returns risk, where losses early in retirement have a bigger impact compared with losses later on.

Delaying Social Security avoids that uncertainty. Instead of relying on market performance, you lock in a higher monthly benefit that grows at a fixed rate and is guaranteed for life.

Delaying comes with guaranteed increases

For anyone born in 1943 or later, Social Security offers a clear incentive to wait. After full retirement age, your benefit grows by about 8% per year until age 70.

That means someone with a full retirement age of 66 would see roughly a 32% higher monthly check by waiting until 70, and once you claim, that larger amount is locked in for life and also boosts survivor benefits.

Whether delaying pays off overall depends on how long you collect benefits.

Analysts often point to a "break-even" age, usually somewhere in the late 70s or early 80s, when the total dollars received from waiting finally catch up to what early claimers collected. If you live past that point, the larger monthly payments start to pull ahead.

That matters because many people live into their 80s and beyond. Social Security was designed to support those later years, when personal savings may be thinner and medical costs tend to rise.

Delaying also strengthens inflation protection. Cost-of-living adjustments apply to your starting benefit, so a higher base means every future raise is larger, too. Over time, that compounding effect can make a meaningful difference in how far your income stretches.

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Who might benefit from claiming early

Early claiming can make sense for a small slice of retirees. Research from firms like Vanguard suggests it may work best for people with sizable portfolios who don't depend on Social Security to cover everyday expenses.

For them, the bigger risk is not running out of money, but not living long enough for waiting to pay off.

If someone has poor health or a shorter life expectancy, claiming at 62 could lead to higher total benefits over their lifetime. Because their living expenses are already covered by savings or investments, the timing of Social Security matters less to their day-to-day finances.

That situation, however, isn't the norm. Federal data shows Social Security remains a major source of income for most older Americans, while higher-income households rely on it far less.

Early claiming strategies tend to fit this wealthier group, not households where Social Security is needed to cover regular expenses.

Bottom line

Claiming early can make sense in limited cases, especially if you have significant savings and don't expect to rely heavily on Social Security for long. For others, waiting can lead to higher lifetime income, particularly if you expect to live into your 80s and beyond and depend on that monthly check.

What matters most is how Social Security fits into your overall financial picture. Your health, savings, work plans, and household needs all affect the outcome. A choice that boosts income for one person could create trade-offs for another.

At the end of the day, there's no universal rule to follow. The goal is to make the right moves for your retirement, based on your numbers and the life you expect to live.

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