Suze Orman Is Right About Social Security and Dave Ramsey Is Missing the Point

Suze Orman and Dave Ramsey could not be more different when it comes to the right time to claim Social Security. While the personal finance gurus both give practical advice to their readers and listeners that’s focused on making smart spending and saving decisions, they have opposite opinions on one of the biggest decisions that you will make in your life.

While it’s worth considering the arguments that both experts make, ultimately, Suze Orman is almost assuredly correct, and Dave Ramsey is almost definitely wrong about when to claim Social Security. 

The data shows Orman’s strategy is the way to go

Orman is very clear that she believes claiming Social Security at 70 is the best approach. In fact, Orman even recommended that an older couple in poor health should wait to claim benefits, even though many experts point to health issues as a reason for an early claim.

The reason why Orman believes a delayed claim is best: You end up with a bigger benefit, and are likely to end up with more lifetime income. And this is often true even if you do have some medical issues. That’s because people with chronic conditions can still live a long time. And, the bottom line is, filing for benefits before age 70 is guaranteed to shrink your monthly income. Plus, it will reduce survivor benefits if you are the higher earner and leave a spouse behind.

Orman’s position is also backed up by data, as studies from the National Bureau of Economic Research have made clear that around 90% of people will end up with more benefits over a lifetime when they delay the start of their Social Security checks until age 70. 

Ramsey’s advice isn’t practical in real life

Dave Ramsey, on the other hand, takes the opposite position. He advises claiming benefits when you turn 62 so you can get as much money out of Social Security as fast as you can. He thinks this is best since benefits disappear when you die. Ramsey also said that if you claim at 62, you could invest the Social Security money if you don’t need it right away. You could potentially do better and end up with more lifetime wealth than you would if you waited. 

Unfortunately, this advice is just not very good. Of course, if you die before starting benefits or soon after, that’s not ideal. However, that’s unlikely to happen if you are already in your 60s. Most people are living longer nowadays, and studies have repeatedly shown that the majority of people outlive the life expectancies that were in place when Social Security was created. This is a big reason why people end up with more lifetime benefits.

Of course, there’s also the fact that your benefits don’t necessarily die with you. Your surviving spouse can get survivor benefits. And delaying your own benefits claim increases those survivor benefits.

As for claiming early and investing, this is impractical. If you work too much when collecting Social Security, you forfeit checks temporarily. So, unless you are using investment income to live on while claiming Social Security just to invest it, this approach would leave you with no money. And, drawing from investment income to live on while investing Social Security benefits seems pretty pointless.

Plus, there’s the fact that most people realistically would spend the money rather than save it, shrinking lifetime Social Security checks in the process.

For all of these reasons, Orman is right, and Ramsey is wrong about when you should start your benefits, and most people will end up a lot better off if they follow her advice and delay their Social Security claim as long as they can.