Dave Ramsey’s Surprising Social Security Advice Could Backfire On You

By Christy Bieber Published Dec 19, 9:00AM EST

Quick Read

Dave Ramsey recommends claiming Social Security at 62 and investing it for 10% to 12% annual returns instead of delaying benefits.
Most workers cannot claim at 62 and invest the money because earnings over $24,480 trigger benefit forfeitures of $1 for every $2 earned.
Investing Social Security benefits early is high-risk for retirees who may need to sell during market downturns.

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Dave Ramsey’s Surprising Social Security Advice Could Backfire On You — © Beth Gwinn / Getty Images

Dave Ramsey is usually a huge proponent of delayed gratification and of making responsible money moves to help build wealth. That’s why it’s pretty surprising that Ramsey suggests claiming Social Security at the age of 62. That’s the youngest age when benefits become available, and the general consensus among financial experts is that claiming benefits ASAP is a bad choice that will cost you in the end.

So, why does Ramsey recommend starting Social Security so young, and is it a good idea to listen to him, or could the advice backfire big time? Here’s what you need to know.

What is Dave Ramsey’s Social Security recommendation?

Ramsey made his recommendation about Social Security in response to a question about when to claim benefits that was raised on a podcast in 2019. At that time, he suggested that you claim your benefits at 62 and then invest the money. He suggested that this approach could be a better one than just delaying your benefits claim and letting your Social Security checks grow, because he thinks you can earn 10% to 12% average annual returns through your investing.

With the caveat that you need to invest the money, Ramsey’s advice makes a little more sense on the surface. He isn’t suggesting that you just claim benefits and spend the money. He believes that you can claim and do a better job investing and growing the funds than if you just sit back, wait, and let your checks increase by avoiding early filing penalties and eventually earning delayed retirement credits if you don’t claim Social Security when you first become eligible for it.

What’s wrong with Ramsey’s Social Security recommendation?

USA Social security cards laid on pile of dollar bills to illustrate money in retirement

Unfortunately, there are a number of big problems with Ramsey’s Social Security recommendation that make it bad advice for most people. His advice is likely to backfire and leave you with less money than you otherwise would have had as a senior for a few key reasons:

It is impractical for most people: The first big issue is that most people simply can’t do what Ramsey is suggesting. If you claim Social Security at 62 and start investing it instead of spending it, there’s a big problem. If you keep working while on Social Security and you earn too much money, you will forfeit your benefits because there are work limits for anyone under full retirement age who collects Social Security. In 2026, if you earn more than $24,480 and will not hit your full retirement age at any point during the year, you lose $1 in benefits for every $2 you get. You eventually get that money back because benefits are recalculated at FRA. But, in the meantime, you can’t just get your benefits and invest them. The only way this would work is if you retired and lived off savings while investing Social Security, which most people can’t do.
It is high-risk: Ramsey’s advice is also really high risk because most people just aren’t going to follow through with investing, and even if they do, there is too great a chance they will lose the money instead of making the gains Ramsey anticipates. You would have to be really disciplined to invest every dollar of your Social Security, and you can’t guarantee that you won’t end up investing at a bad time. Since you’ll have to begin relying on this money to cover retirement costs soon, investing all of it puts you at serious risk of having to sell at a loss if a market downturn happens. This is why retirees usually start moving some of their assets out of the stock market as they near their retirement years.

The bottom line is, gambling on claiming Social Security at 62 and hoping you can invest and earn good returns makes no sense when you can just wait to claim benefits and are guaranteed to end up with higher Social Security checks.

Of course, there may be times when an early claim makes sense for other reasons, so your best option is to work with a financial advisor to decide on the best age for claiming Social Security in your own personal situation. But don’t follow Ramsey’s advice because you could end up with major regrets.