According to financial guru Dave Ramsey, he is not such a fan of Social Security, as he has referred to the program as “something stupid” and a “mathematical disaster” that “stole” him money for decades, so it should come as no surprise that Ramsey expresses his wisdom about the age at which people should claim their Social Security benefits.
Ramsey comments that a good age to collect Social benefits is 62 years old (a topic that most financial experts do not advise). He says that if he takes his checks and invests them, it generates a higher return than if he waits to apply for social Security at an older age, that means that he will receive a check with a higher income every month.
Start Saving for Retirement as Early as Possible
“It usually makes sense to do it early if you’re going to… invest everything,” Ramsey said in a 2019 podcast.
The way Social Security is designed, the longer you take to collect retirement benefits, the higher your monthly check will be. Applying for your Social Security benefits at age 62 means you will receive a check possibly smaller. su check annually experiences a growth after the age of 62, if you wait to collect Social Security.
When you reach full retirement age, you will receive all the benefits accumulated based on the social Security payroll taxes to which you have contributed during all the years worked. The maximum age at which the amount does not receive more financial advantages is 70 years, from this age you should already submit the application, because you cannot expect that it will generate more increases.
According to a recent study by David Altig of the Federal Reserve Bank of Atlanta, Laurence Kotlikoff of Boston University and Victor Yifan Ye, a research scientist at Opendoor Technologies, if you wait until age 70 to apply for your Social security your finances could increase by more than $182,000.
Is This the Magic Age to Claim Social Security?
Therefore, if you decide to collect as soon as you turn 62, your benefit will be significantly affected by a reduction of at least 30% for the rest of your life, than if you wait at least at full retirement age.
Ramsey says that if you put your checks in a mutual fund, you can make up the shortfall if you applied for your social Security at age 62.
That bill will make you more than enough to cover the difference between your 66 [age] bill and your 62 [age] bill, Ramsey said on the podcast before ranting about Social Security being a “broken system” and a “mess.”
However, Ramsey talked about the mutual funds, but, he did not make any mention of examples or what characteristics they should have to be a good mutual fund, I did not take into account that the beneficiaries are not experts in finance and cannot afford to hire one, as well as the fact that many of the social Security beneficiaries need their checks to cover their expenses and help pay their bills, and they do not have enough means to place them in a mutual fund and wait for the coming years to see the fruits.
