Dave Ramsey Thinks Social Security Is a 'Mathematical Disaster' – But Still Says It Makes More Sense To Take It At 62 'Almost Every Time'

Many people struggle with deciding when to start collecting Social Security. It's not just a financial decision; it's a gamble on your health, longevity and even the stock market if you plan to invest. Should you wait to maximize your benefits or claim early and make those dollars work for you? Dave Ramsey has some loud – and controversial – opinions on the subject.

Ramsey has always been vocal about his disdain for Social Security. In 2019, he referred to it as a "stupid thing" and a "mathematical disaster," claiming the system had been "robbing" him and others for decades. He doesn't tell people to avoid Social Security entirely despite his criticisms. In fact, he recommends taking benefits at age 62 – but only if you're planning to invest every penny of it.

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During another episode of his show that same year, a caller asked Ramsey when the best time to take Social Security would be. Ramsey explained that waiting until 66 or 70 results in higher monthly payments, but there's often a better financial outcome when you claim early and put those payments to work in investments. "The later you start, every year you get more," he said. "But if you run some math out, you can actually run the calculations on their site – it's fairly easy to do." He emphasized that most scenarios favor starting benefits early if you're disciplined about investing the money.

Ramsey broke it down further, saying, "The difference [between taking benefits at 62 versus 66 or 67] could be made up almost every time by taking every dollar from 62 to 66 you get and putting it in a good investment. If the investment returns give you greater than the difference for the rest of your life – almost every time – it makes sense to take it early."

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For example, according to Ramsey, investing $700 a month from 62 to 77 – about 15 years – could result in over $318,000. He argues that this strategy could outperform waiting for larger payments at full retirement age. 

The strategy is bold, but it's not without risks. Critics have pointed out that Ramsey's plan isn't realistic for most retirees. Market returns, while historically positive, aren't guaranteed. Average mutual fund returns hover around 4.67% over two decades, far less than Ramsey's more optimistic projections. Plus, many retirees simply can't afford to invest their Social Security – they need it to pay for essentials like housing, food and health care.

Most financial experts recommend delaying Social Security benefits, especially if you expect to live a long life. Waiting until full retirement age – or even age 70 – means higher monthly payments for the rest of your life, which can offer more stability than taking an early, reduced amount.

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Ramsey's advice is undoubtedly polarizing, but it's not designed for everyone. It's aimed at people with additional income sources, a high tolerance for risk and the discipline to invest consistently. If that's not you, this strategy could leave you worse off.

At the end of the day, deciding when to claim Social Security is a deeply personal choice. It's about weighing your financial situation, health and goals. And whether you agree with Ramsey or not, one thing is certain: when it comes to Social Security, you're always taking a gamble. As Ramsey joked to the caller, the "trick to knowing when to take social security is knowing when you're gonna die." 

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