Suze Orman Tells Caller Investing $500 Per Month from Early Social Security Would Be "The Most Ridiculous Thing You Have Ever Done"

Personal finance expert Suze Orman recently told a caller that claiming Social Security early and investing in it is not advisable. The question on her podcast "Women & Money" was, "Can I apply for retirement Social Security and receive the $500 a month and invest it while working part-time until I am in full retirement age?"

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Orman responded, "You can, but it would be the most ridiculous thing you have ever done in your life."

Orman has consistently advised against withdrawing Social Security benefits early. She recommends that most people wait as long as possible to get the full benefit. 

"If you really want to make the most out of that money," she says, "can you just do me a favor and don’t claim it at all? Just wait until you’re 67 and you would get a whole lot more money, probably more than you would make investing it."

Americans can start claiming their Social Security benefits at age 62. However, doing so results in a 30% lower payout than if you wait until full retirement age. Currently, full retirement age is 67 years old for those born in 1960 or later. Additionally, if you wait until age 70, the benefit will be 76% more than it would have been at age 62. 

In Orman's blog, she states, "Perhaps no decision is bigger than deciding when to start receiving your Social Security benefit. We have talked about this before: if you are in your late 50s and in good health, you should seriously consider the upside of delaying when you start, so you can earn a higher benefit."

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Orman frequently mentions that a healthy woman who lives to age 65 has a 50% probability of being alive at age 88, more than 20 years later. "That's an argument for waiting if you expect to rely on Social Security for a lot of your retirement income."

Many people rely on their Social Security benefits as a source of retirement income. It represents about 30% of the total income for people over age 65, and 40% of older Americans rely solely on Social Security for their retirement income. 

Life expectancy has continued to increase since Social Security benefits first began. In 1940, the life expectancy of a 65-year-old was about 14 years; today, it is more than 20 years. For people living well into their 80s and 90s, Orman's advice about waiting to withdraw Social Security makes a lot of sense. 

Deciding when to start collecting Social Security benefits is a significant decision, and there's a lot to consider. Listening to the expert guidance of a financial advisor can help you make the best decision for your future so you can live the retirement that you want. 

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