Kevin O'Leary Says This One Social Security Decision Could Be the Costliest Mistake of Your Life

You only get one chance to decide when to claim Social Security, and that choice can affect your income for the rest of your life.

Kevin O'Leary and Dave Ramsey offer opposite advice because they see the program's role in a retirement plan very differently. O'Leary favors waiting for a larger check later, while Ramsey believes claiming early gives you more time to put the money to work.

Each approach works best under different circumstances, and knowing where they differ can help you choose the claiming strategy that's right for you.

How claiming at 62 versus 70 permanently changes your benefit

Social Security lets you start benefits as early as 62, and every month you wait past that point increases your check. If your full retirement age is 67, claiming at 62 would permanently reduce your check by about 30%, while waiting until 70 would increase it by roughly 8% a year after full retirement age.

For someone entitled to $2,000 a month at full retirement age, that could mean receiving about $1,400 at 62 or roughly $2,480 at 70. The difference is around $1,080 a month, and it would continue for the rest of your life.

Ramsey's case for claiming at 62

Ramsey's argument is that money in your hand is worth more than a promise of a larger check later. He recommends claiming at 62 and investing the payments, arguing that stock market returns can outpace the 8% annual increase you'd get from waiting.

"You can do a much better job investing that money than the government ever could," he has written on the Ramsey Solutions blog.

He also points to the risk of waiting too long. "Your retirement payments die when you die," he told a caller on The Ramsey Show, "so you might as well take the money and make the most of it while you can."

If your lifespan turns out to be average or shorter, collecting for more years at a lower amount can produce more total income than waiting for a larger check you receive for fewer years.

The catch is that the strategy depends on investing those payments. If the money goes toward regular expenses instead, the higher returns Ramsey is counting on may never happen.

O'Leary's case for waiting until 70

O'Leary sees Social Security as income you can count on for the rest of your life, with annual increases that help it keep pace with inflation. He favors waiting as long as possible and relying on other income until age 70.

He has repeatedly said Social Security was never meant to fully support retirees. Instead, he views it as a reliable source of income that can provide more security later in retirement if your savings begin to run low or your expenses increase. The longer you live, the more valuable that larger monthly benefit becomes.

How the break-even age affects your decision

Based only on cumulative benefit payments, the break-even point between claiming at 62 and waiting until 70 often falls around age 80. If you live beyond that, the larger monthly checks from waiting can add up to more income over your lifetime. If you die earlier, claiming sooner may leave you with more overall because you collected benefits for more years.

The exact break-even age varies based on your benefit amount and how long you live, but waiting becomes more rewarding as those larger monthly checks continue over time.

The claiming decision that affects two checks, not one

Your claiming age can affect your spouse's income as well as your own. When one spouse dies, the survivor generally keeps the larger Social Security check while the smaller benefit ends.

If the higher earner waits until 70, the larger benefit continues for as long as either spouse is alive. That can provide valuable protection when one partner earned much more than the other, since the household may eventually have to rely on a single check.

Ramsey's case for claiming early becomes harder to apply in this situation. The higher earner is not only deciding when to start their own benefit but also how much income the surviving spouse may receive later.

Which approach fits your situation

Claiming early may make sense if poor health or your family history suggests you are less likely to enjoy a long retirement. If you expect to live well into your 80s, waiting can increase the total amount you receive over your lifetime.

Your finances can also affect how much flexibility you have. Savings, a pension, or earnings from work may allow you to delay Social Security without struggling to cover your expenses. Someone who needs the money sooner may find that claiming early is the more practical choice, even if it means accepting a smaller monthly check.

Ramsey's approach works best if you'll invest those early checks and leave them invested long enough to earn strong returns. If there's a good chance the money will go toward everyday expenses instead, waiting offers a larger guaranteed benefit without depending on the stock market.

Bottom line

Kevin O'Leary favors waiting for a larger Social Security check, while Dave Ramsey sees value in claiming early and investing the money. Either approach can work, but only when it fits the rest of your retirement goals.

Your choice depends on whether you can afford to delay benefits and how much guaranteed income you may need later. Once you claim, the decision affects every check that follows, so it's worth running the numbers based on your own finances and expected lifespan before choosing a claiming age.

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