When Does Dave Ramsey Say to Take Social Security?

Dave Ramsey, a prominent financial personality, offers a distinct philosophy on Social Security, often challenging conventional wisdom. His advice on when to claim benefits is rooted in personal financial responsibility and wealth accumulation. This article explores Ramsey’s perspective, the factors he suggests considering for claiming age, and how these benefits integrate with a comprehensive financial plan.

Dave Ramsey’s Viewpoint on Social Security

Dave Ramsey consistently asserts that Social Security should be considered a supplemental income source, not the primary foundation of a retirement plan. He emphasizes the program was designed to provide a safety net and supplement retirement income. Ramsey often highlights concerns about the program’s long-term stability, noting projections that the Social Security trust fund could face depletion within the next decade. This perspective drives his encouragement for individuals to build their own substantial personal wealth.

Ramsey advocates for a financial strategy centered on personal responsibility, living debt-free, and aggressive saving and investing. He advises individuals to invest 15% of their gross household income into tax-advantaged retirement accounts, primarily growth stock mutual funds. This approach aims to cultivate a robust personal retirement fund that can serve as the main source of income in retirement. For Ramsey, relying heavily on Social Security indicates a lack of proactive personal financial planning, which he believes can lead to financial hardship.

He points out that the average Social Security payout, around $1,657 per month in 2022, is often insufficient to cover living expenses comfortably. Ramsey’s advice promotes building enough personal wealth so that individuals are not reliant on these benefits for their daily needs. This stance underscores his belief that financial independence offers greater flexibility and peace of mind in retirement.

Key Considerations for Claiming Age

When considering the optimal time to claim Social Security, Dave Ramsey encourages individuals to evaluate their personal financial strength. While many financial experts suggest delaying benefits to maximize monthly payouts, Ramsey often suggests claiming benefits earlier, such as at age 62, can be a sensible option for those who plan to invest the proceeds. This strategy is particularly relevant if one does not immediately need the Social Security income for living expenses. The core idea is that by investing early payments, the accumulated returns could potentially surpass the benefits of waiting for a larger monthly check.

Ramsey also highlights the importance of personal health and life expectancy in the claiming decision. If an individual anticipates a shorter life expectancy due to health concerns or family history, claiming benefits at age 62 can ensure they receive payments they might otherwise miss by waiting. Social Security payments cease upon death, and for some, the total lifetime benefits received might be higher by claiming earlier. For example, someone eligible for $2,000 per month at their Full Retirement Age (FRA) of 67 would receive about $1,400 per month if they claim at 62, with the total amount paid out potentially evening out around age 78.5.

Ramsey cautions against claiming early if an individual is still earning a substantial income and is below their Full Retirement Age. If an individual claims benefits before their FRA and earns above a certain limit, Social Security will deduct $1 for every $2 earned over that limit, which was $21,240 in 2024. This earnings test can significantly reduce the value of early benefits. Ramsey advises waiting until income decreases or full retirement occurs to avoid these penalties. He also touches on spousal benefits, noting that a spouse with little or no earnings history can receive half of their partner’s full retirement age benefits, but individuals should always claim the higher of their own or their spousal benefit.

Aligning Social Security with Your Financial Plan

Regardless of when Social Security benefits are claimed, Dave Ramsey’s overarching message is that these payments should be considered a “bonus” or a “cherry on top” of a well-established personal financial plan. His emphasis remains on individuals proactively building their own financial security rather than relying on government programs. This begins with his “Baby Steps,” a sequential plan designed to achieve financial freedom.

The initial steps involve saving a starter emergency fund of $1,000, followed by paying off all non-mortgage debt using the debt snowball method. After becoming debt-free, individuals are encouraged to build a fully funded emergency fund covering three to six months of essential expenses. Once these foundational steps are complete, the focus shifts to aggressive investing, with Ramsey recommending that 15% of household income be directed toward retirement savings.

This aggressive investing involves growth stock mutual funds within tax-advantaged accounts like 401(k)s and Roth IRAs. The goal is to accumulate enough personal wealth to ensure financial independence, making Social Security an optional supplement rather than a necessity. A well-funded personal retirement plan provides the flexibility to choose when to take Social Security benefits without financial pressure. If benefits are claimed early, Ramsey suggests investing those funds to further enhance personal wealth, potentially offsetting the reduced monthly payment. This integrated approach prioritizes building a robust financial foundation that can withstand economic uncertainties and provide a comfortable retirement, with Social Security serving as an additional, rather than primary, layer of income.