Dave Ramsey Says Claim Social Security at 62 and Suze Orman Says 70. Who’s Right?

One of the hardest financial decisions you might have to make in your lifetime is figuring out when to claim Social Security. And the reason is that your filing age has a huge impact on your monthly benefits.

But let’s back up for a minute and talk about how those benefits are calculated.

In a nutshell, they’re based on your 35 highest-paid years of earnings. Earlier wages of yours are adjusted for inflation, and a formula is used to figure out what monthly benefit you’re entitled to at your full retirement age (FRA).

You don’t have to claim Social Security at FRA, though, which is 67 for anyone born in 1960 or later. You’re allowed to take benefits as early as age 62, or you can delay your claim until age 70 for boosted monthly checks.

Financial guru Dave Ramsey thinks claiming Social Security at 62 is the smartest move in general. But financial expert Suze Orman thinks it makes sense to file for Social Security at 70.

So who’s right? It depends.

Understand the consequences of filing at different ages

The reason Ramsey suggests claiming Social Security at 62 is simple. The earlier you sign up for benefits, the more monthly checks you might collect in your lifetime.

Ramsey is also a fan of claiming Social Security early and investing that money to grow it into a larger sum. The reality, though, is that most early filers probably won’t do that.

Orman, on the other hand, likes the idea of taking Social Security at 70 for larger monthly checks. Orman is aware that many Americans don’t have much retirement savings, so filing for Social Security at 70 is a way to compensate for that to some degree.

Also, Social Security is many people’s only source of guaranteed retirement income. Even people with savings risk having that money run out eventually. A larger monthly Social Security check could lead to more peace of mind throughout retirement.

Still, it’s important to understand the financial consequences of following both Ramsey and Orman’s advice. So let’s run some numbers for a better idea of what filing early or late entails.

Let’s say you’re eligible for $2,000 a month in Social Security at an FRA of 67, which is roughly in line with what the average retiree receives today. If you file for Social Security at 62 instead of 67, you’ll shrink your monthly benefits to $1,400. If you file at 70, you’ll boost those benefits to $2,480.

Clearly, there’s a huge difference between collecting $1,400 a month in Social Security versus $2,480. So you’ll need to figure out what makes sense for you.

It’s a personal decision

You may be wondering whether Ramsey is right in that 62 is an optimal Social Security filing age, or whether Orman’s advice is better. The answer? It depends on you.

Some people should follow Ramsey’s advice, while others should stick to Orman’s guidance. But there’s no universal right or wrong age to claim Social Security.

Here’s what you should consider in the context of when to claim Social Security:

• How’s my health? If it’s in good shape, delaying your claim could make sense. If it’s poor, you may want to file early.
• How much other income do I have? If you don’t have a lot, filing for Social Security at 70 could be a smart move. If you have a large amount of savings, filing early and investing the money like Ramsey suggests could be doable.
• What do I want to use those benefits for? If you need them for basic living expenses, filing later could be wise. If you plan to use them for travel and leisure, you may want to file early so you can access that money while your health is stronger.

Ultimately, the decision to sign up for Social Security is a personal one. You can, and should, read up on what Ramsey and Orman have to say on the matter. But at the end of the day, you’ll need to consider your own circumstances to arrive at a smart choice.