Dave Ramsey rarely gives cautious financial advice, and his position on Social Security may be one of his most controversial. While many retirement planners encourage workers to delay claiming in exchange for larger guaranteed monthly checks, Ramsey often recommends starting benefits at 62. His reasoning is simple: collect the money early, invest every check and potentially build a larger nest egg than waiting would provide.
The strategy sounds compelling, especially for disciplined investors who expect strong market returns. But it depends on assumptions that may not hold for every retiree—including consistent investing, favorable performance and living long enough for delayed benefits to matter. Claiming at 62 also permanently reduces the monthly payment. Here is the math behind Ramsey’s advice, where it could work and why following it blindly could become an expensive retirement mistake.
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Ramsey says you should claim Social Security early for one key reason
Ramsey’s argument is not that retirees should claim Social Security at 62 and immediately spend the money. His position is that people who can cover their living costs without the benefit may be better off filing early and investing every check in growth-oriented mutual funds. That gives the money years to compound and allows any remaining investment balance to become part of an estate. Ramsey also stresses that Social Security payments generally end at death, aside from benefits that may be available to an eligible spouse or dependent. His approach is therefore aimed at financially secure retirees with the discipline and risk tolerance to invest the checks, not people who need Social Security to cover essential expenses.
Why Ramsey’s strategy can work
For people born in 1960 or later, full retirement age is 67, and claiming at 62 reduces the monthly retirement benefit to 70% of the full amount. The trade-off is that the retiree receives five additional years of payments before someone waiting until 67 collects a dollar. Investing those early checks can create a meaningful head start, particularly when markets perform well during the first several years. The strategy can also make sense for someone with serious health concerns, limited family longevity, no financially dependent spouse, and enough other income to absorb market losses. In those circumstances, collecting earlier may produce more usable wealth and provide greater control over how the money is saved, invested, spent, or eventually passed to heirs.
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Delaying offers something the market cannot guarantee
The strongest case against Ramsey’s strategy is that delaying Social Security increases a source of income that does not depend on stock prices. For people born in 1943 or later, benefits rise by 8% for each full year a person delays after full retirement age, with increases stopping at 70. Someone with a full retirement age of 67 can therefore receive about 124% of the full benefit by waiting until 70. That 8% figure should not be treated exactly like an investment return because the retiree gives up checks while waiting. Still, the resulting larger payment lasts for life and can strengthen survivor protection for a spouse. A stock portfolio may outperform, but it can also fall sharply at the wrong time. Social Security does not carry that sequence-of-returns risk.
COLAs make the comparison more complicated
Social Security’s annual cost-of-living adjustment is based on the CPI-W, and the same percentage increase applies whether a person claimed early or waited. However, the dollar increase is larger when it is applied to a larger monthly benefit. A retiree who claimed at 62 therefore continues receiving COLAs, but those adjustments build on a benefit that was permanently reduced for early filing. Delaying does not create a special COLA rate; it creates a larger starting payment to which future COLAs are applied. That matters during a long retirement because each percentage increase compounds from a higher base. Ramsey’s investment strategy can still win if returns are strong enough, but the portfolio must overcome both the early-claiming reduction and the value of a larger inflation-adjusted income stream later in life.
Retirees are still losing ground to rising costs
The official COLA is designed to track inflation, but many retirees argue that the CPI-W does not reflect how older households actually spend. The Senior Citizens League, using its own index of 70 goods and services, estimates that Social Security benefits lost 13.7% of their buying power between 2016 and 2026. The advocacy group calculates that restoring that lost purchasing power would require a 15.7% increase, equal to about $295.85 per month for the average beneficiary. Those are not official Social Security Administration figures, but they highlight why claiming decisions matter. A permanently reduced benefit may become more difficult to live on as healthcare, housing, insurance, and utility costs rise, especially if investment returns disappoint or savings are depleted.
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The 2027 COLA forecast has changed
The latest estimates also show why retirees should not make a claiming decision around a preliminary COLA forecast. As of July 14, 2026, The Senior Citizens League projected a 3.8% adjustment for 2027, while independent analyst Mary Johnson lowered her estimate from 4.7% to 3.7% after June inflation cooled. The official number has not been determined. Social Security calculates the COLA by comparing the average CPI-W reading for July, August, and September with the corresponding third-quarter average used for the previous adjustment. The Bureau of Labor Statistics is scheduled to release September inflation data on October 14, 2026, and the Social Security Administration says the new COLA will be announced in October. Until then, every estimate remains provisional.
The solvency problem does not automatically favor claiming at 62
The 2026 Social Security Trustees Report projects that the retirement and survivors trust fund, known as OASI, can pay all scheduled benefits until the fourth quarter of 2032. If Congress makes no changes, continuing revenue would cover about 78% of scheduled OASI benefits after reserves are depleted. On a theoretically combined basis, the retirement and disability funds would remain fully funded until the third quarter of 2034, when ongoing income would cover roughly 83% of scheduled benefits. Those projections are serious, but they do not prove that filing at 62 is always safer. Congress could raise revenue, reduce future benefits, change eligibility rules, or adopt a combination of reforms. Claiming early locks in a smaller benefit today without guaranteeing protection from future legislation.
A proposed benefit cap could affect the highest earners
One policy idea receiving attention is the Committee for a Responsible Federal Budget’s “Six Figure Limit.” The proposal would initially cap annual retirement benefits at $100,000 for a couple claiming at normal retirement age and $50,000 for a single beneficiary, with adjustments for marital status and claiming age. Under the inflation-indexed version modeled by the group, the policy would save an estimated $100 billion over 10 years and close about one-fifth of Social Security’s 75-year solvency gap. However, this is a think-tank proposal, not current law, and CRFB itself presents it as one option for a broader reform package. High earners should monitor the debate, but filing early solely because a future cap might be enacted would mean making an irreversible decision based on an uncertain policy outcome.
Understand the investment and behavior risks
Ramsey’s approach depends on two uncertain outcomes: future market returns and the retiree’s own behavior. A person who claims at 62 and invests every payment could benefit from years of growth, but a major downturn early in retirement can leave the account far behind projections. The strategy also assumes every check will actually be invested. Once the money begins arriving, it may be redirected toward travel, home repairs, family assistance, medical bills, or ordinary spending. Taxes and investment fees can further reduce the advantage. By contrast, delaying converts part of a retiree’s future wealth into a larger lifetime payment that cannot be outlived. Early claiming may be reasonable for someone with substantial guaranteed income and high risk capacity, but it is far less forgiving for a household with limited savings.
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The earnings test can disrupt Ramsey’s plan
Retirees who claim before full retirement age and continue working must also account for Social Security’s earnings test. In 2026, someone who will remain below full retirement age for the entire year can earn up to $24,480 before benefits are withheld. Above that amount, Social Security withholds $1 for every $2 of excess earnings. A higher $65,160 limit applies during the year a person reaches full retirement age, with $1 withheld for every $3 earned above the limit before the FRA month. The withheld benefits are not permanently lost; Social Security recalculates the monthly payment at full retirement age to credit months affected by the test. Even so, withholding can leave less cash available to invest at 62, weakening the exact strategy Ramsey describes.
Break-even math is useful, but it is not the whole decision
Using Social Security’s standard percentages and ignoring taxes, COLAs, investment returns, and the time value of money, a person with a full retirement age of 67 generally breaks even between claiming at 62 and 67 at about age 78 and eight months. Comparing 67 with 70 produces a break-even point near age 82 and six months, while comparing 62 directly with 70 produces a point around age 80 and four months. These figures are only rough guides. They do not account for a spouse’s survivor benefit, differences in taxation, portfolio withdrawals, personal health, or the value of guaranteed income late in life. Social Security is not merely an investment account; it is also insurance against living much longer than expected and exhausting other assets.
Who should consider Ramsey’s Social Security strategy?
Ramsey’s strategy is most defensible for a retiree who does not need Social Security for current expenses, has substantial savings or other guaranteed income, expects to invest every payment, can tolerate a market decline, and has carefully considered the effect on a spouse. It may also appeal to someone with a materially shortened life expectancy who values leaving investable assets to heirs. For many other households, delaying remains the more resilient choice because it increases guaranteed, inflation-adjusted income during the years when savings may be running low. The correct decision is not determined by a universal age or a single break-even calculation. It depends on health, marital status, taxes, employment, spending needs, risk tolerance, and how much dependable income the household already has.
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