I am curious to learn what people think about the advice from Dave Ramsey, since it is different from Clark Howard’s… Financial expert Dave Ramsey says it makes sense (in most cases) to take the money early and often. Social Security payments die when you die, so you might as well get all you can get as fast as you can get it. And if you don’t need that Social Security money, you can always invest it in good growth stock mutual funds and just let it grow. That way, the money at least becomes part of your estate. If you take nothing, you get nothing! What Is Full Retirement Age? And What Does It Mean for Your - Ramsey
All I need to know about Dave Ramsey I discovered back in 2007. His “Recommended Real Estate Agents” are chosen by virtue of what they were willing to pay Dave Ramsey for that “distinction.”
I know because as a top-ten agent in my market I applied for his “Recommended” status and was informed by his staff that I could qualify if I was willing to pay $X and no one else applied. They didn’t ask for any proof of sales performance, experience or references that would indicate his recommended agents possessed “experience, integrity, and commitment to helping you succeed,” as his website claims.
A few months later I noticed a mediocre-performing agent in our market who had a less-than-average reputation advertise that they were Ramsey’s “recommended” agent for our area.
He sells his “recommended” status to the highest bidder.
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Dave Ramsey does not give good advice about Social Security. Most individuals should consider delaying social security until full retirement age. Exceptions include individuals who can’t afford delaying benefits or individuals wit limited life expectancy. One other specific exception is a couple where the lower earning spouse often benefits from taking social security early.
Mike Piper is a good source to educate yourself. Piper has a book “Social Security Made Simple” (2022 edition $4.95) and website theobliviousinvestor with the article “When should I take Social Security Benefits”. You can use his free “opensocialsecurity” calculator to input your information and find out what your monthly benefits would be if you file at different ages.
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LIfe expectancy is a tough one to figure. I am active, and knock on wood, I’m healthy, but my family history would indicate I will die by 75. I might beat that if I’m lucky, but I’ll assume I won’t. Also…one of my coworkers was going to wait but then a different coworker delayed until 70 and then slipped on the basement stairs and died before her 71st birthday.
I would say you should gauge life expectancy based on family history and personal health.
Random accidents happen irrespective to age; certain types of accidents (falls, for example) become more common with age, and with age related conditions (arthritis; worn/damaged knees, hips, etc.; Parkinson’s; various palsies; glaucoma, cateracts, macular degeneration, and other eye diseases that can significantly impact vision; deafness that can affect balance and prevent hearing warnings; cardiac, vascular and pulmonary conditions that can impact strength; etc… many of these conditions are more or less common in families.)
Another thing to consider is whether you have a spouse or other potential survivors that you want to ensure have the largest benefit available.
Additionally, whether you can draw on your own benefit as well as a survivor benefit. In my case, taking my own benefit at 62, and my survivor benefit at its full retirement age was the best choice.
But don’t expect Social Security employees to tell you correct information or to file correctly if you ask them to do it.
Another thing to take into consideration is our government, who knows if they will reduce benefits or raise the retirement age.
I’m generally an optimistic person. But as I approached 62 I just couldn’t shake the idea that I would be like Clark and wait to 70. Then as I’m climbing the steps of the SS office to apply I’d die of a heart attack!
I took SS at 62 and my husband at 70, which is the best decision we ever made. We are now 78 and 75 respectively, and currently gross $75,000 yearly in benefits. Because most of our income is from SS, we are taxed on only 55% of it and our state does not tax any SS benefits. We can live comfortably on our SS and our RMDs, which average around $25,000 yearly. If my husband passes away before I do, I also can take his higher benefit. Waiting until 70 is by far the best option if it is possible to live without it for a few years.
It’s not “ a little more money”. In our case it was substantial.
From what I see, the highest payout is $3800 per month. But I agree, there are few Americans that are getting that much in SS benefits. Google says the average SS check is $1,783 per month.
My husband’s gross monthly benefit is $4325 and mine is $1841. Each year you delay you earn an additional 8% and COLA’s are figured on the higher amount each year. My point is, waiting until 70 is not insignificant, whether you receive the maximum benefit or not.
Consider that the $75,000 includes both my husband’s and my benefits, we earned 8% for every year he waited to collect and the COLA was applied to the larger amount, compounded for 5 years so far. No matter the size of one’s benefit, the increase is significant if one waits until age 70.
Ellen Horn
Then there is the issue of - how long past 70 will you live. Taking it early means you can use it for fun stuff in retirment like travel. Waiting often times mean that all that extra money goes to a nursing home.
We did all that fun stuff before we retired, lol. We were more interested in having a guaranteed income in our later years. Thankfully, we still have enough for some fun,
too.
Ellen Horn
I am curious as to why you did not wait till your full retirement benefit age to further maximize your Social Security benefits.
If you run the scenarios, sometimes you don’t get a better payout by waiting if you are the spouse with the lower benefit.
In hindsight, I wish I had, but I was no longer working and the extra income from SS allowed my husband to put more into his IRA. Also, that was the time that a spouse could draw one-half of his spouses’s benefit and apply for and pause his until 70. He was 66, full retirement age when I was 63, so he collected $900 a month from my benefit for 4 years until he reached 70, totaling $43,000 for the four years.That option has since been suspended. I spent a lot of time researching options. Everyone should, because SS is complicated.
Ellen Horn