Dave Ramsey Says Claim Social Security Early, Other Experts Say Wait — Who Is Right?

Dave Ramsey is a shrewd, well-respected expert when it comes to managing finances. While other advisors and gurus don't always agree with him, Ramsey's blunt brand of tough-love money advice definitely grabs headlines.

Notably is Ramsey's controversial take on when to claim Social Security. He urges retirees to claim benefits the moment they turn 62 for more years of payments, while other advisors believe in delaying as long as possible in order to maximize their monthly payout amount.

With these two polar viewpoints, is Dave Ramsey possibly wrong here? Which withdrawal strategy actually works best if you're trying to set yourself up for retirement?

Here's what you need to know about both of these approaches so you can decide which one is best for your situation.

Why Dave Ramsey wants you to claim at 62

Dave Ramsey argues that retirees should claim Social Security the moment they become eligible at 62. Current retirees can claim partial benefits at that age, or wait until age 67 for full benefits.

Beginning withdrawals early will result in a lifetime reduction of your total Social Security benefits by up to 30% each month.

Ramsey's reasoning, however, is based on the assumption that receiving money early gives you more time to grow it. He believes retirees can invest their monthly checks, letting the growth compound in their favor to receive more money than if they had waited longer for full benefits.

Why Dave Ramsey believes you can outperform Social Security

Ramsey's advice is predicated on two hopeful beliefs:

1. Retirees will have the discipline to save every penny and invest it.
2. The market will outperform any increases from delaying benefits.

For retirees with a history of financial rigor (ability to resist temptation and stick to a budget), this path could be advantageous. However, it doesn't leave much margin of error, whether personal mismanagement or market downturns.

The case for delaying benefits past age 67

Many other advisors (although not all) take the opposite stance and urge retirees to delay benefits past the full retirement age, currently 67, waiting instead until age 70.

With this approach, retirees receive a permanent increase in their monthly benefits (around 8%), and these increases are also inflation-adjusted.

For those expecting to live long lives, this guaranteed growth can outweigh any gains from investing smaller checks.

Healthy distrust in market timing (and human nature)

This opposing position boils down to risk. Trusting yourself to take the money now and wisely invest all of it is sheer fantasy — for most of us. Life is expensive, and fiscal restraint is hard.

And in an uncertain market, many believe that delaying Social Security now for higher payouts later is one of the few guaranteed returns available to retirees today. Why pass down a sure thing for a capricious market?

Weighing your risk tolerance

The conflicting advice Ramsey and other experts dole out is heavily tied to their own personal philosophies about money and wealth. Their outlook doesn't necessarily align with your wallet, and there is no one-size-fits-all solution.

If your retirement plan is already heavily bound to Wall Street, it may be unwise to increase your market dependence.

But if your portfolio has a more conservative spread, investing Social Security benefits early in retirement could be the better bet.

When health and longevity enter the equation

If people in your family tend to die young in their 70s or younger, delaying benefits doesn't make sense. Ideally, you'd like to be able to benefit from this income yourself — particularly if you don't have a spouse or dependents who would receive benefits after your death.

Some advisors tell married couples to split the risk: having one spouse withdraw benefits early or at full retirement age while the other delays benefits.

Removing the temptation to spend early

Dave Ramsay's advice is predicated on the belief that retirees will invest early and consistently for maximal long-term growth.

Even with frugality and discipline, this isn't always possible. Access to extra cash each month makes it easy to splurge on travel, eating out, or home renovations — not to mention medical bills, home repairs, or family members begging for financial assistance.

If you truly don't have the funds on hand, it's infinitely easier to regretfully decline assistance.

Financial realities and income needs

Reality is that not everyone has the luxury of deciding whether or not to hold off on taking benefits. Choosing your withdrawal timing often comes down to current financial needs.

Some retirees choose to keep working in their 60s, using the added income to delay benefits. But for many, this isn't feasible. If you're 62 and have no other income, you'll almost certainly have to begin withdrawals early.

Factoring in your overall portfolio mix

If you have a stock-heavy 40(k), you may not want to introduce more market risk by investing early Social Security checks. But if you have a more balanced portfolio, you could benefit from the extra growth potential.

Bottom line

So in the battle of financial wits, Dave Ramsey is neither wrong nor right. Because there's no one uniform solution for all retirees.

Ramsey's advice works if you're financially disciplined and comfortable taking on more risk for long-horizon gains.

The opposite approach, of withdrawing early, doesn't have the potential for as much growth, but it offers some guaranteed growth and inflation protection — appealing for retirees with uncertain lifespans and limited personal wealth.

The best strategy, perhaps, is to ignore expert "conventional" wisdom and instead consult a financial advisor to check up on your retirement readiness. You need answers aligned with your financial needs, risk tolerance, and long-term health outlook, not one guru's take on the best advice for the masses.

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