Financial guru Dave Ramsey called Social Security “stupid” and a “mathematical disaster” that “robbed” people of their money for decades. , it’s safe to say I’m not a fan of Social Security. So it’s no surprise that Ramsey said: contrary to common sense Then Age at which you should claim social security benefits.
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Ramsay says that’s fine. You can receive benefits as early as age 62. Most financial experts advise against accepting checks and investing. By doing so, he argues, you’ll get a bigger benefit than if you wait until you’re older to apply for Social Security, meaning you’ll receive a larger monthly check.
“If you’re going to invest everything, it usually makes sense to start early,” Ramsey said in a 2019 podcast aired on YouTube.
Ramsey was responding to a listener’s question about whether it makes more sense to collect Social Security at age 62 or to wait until full retirement age, which is 66 or 67, depending on your year of birth.
The longer you wait, the longer the social security system becomes. collect retirement money, your monthly payments will be higher. If you claim benefits at age 62, you’ll receive a minimal check. The amount of the check increases each time he reaches the age of 62.
when you hit full retirement age You will receive your full benefit based on the Social Security payroll taxes you contributed during your employment. The maximum payout occurs when you apply at age 70, but there is no financial benefit to waiting after that.
If you wait until you’re 70 to claim Social Security… Increase your finances by more than $182,000according to a recent study conducted by David Altig of the Federal Reserve Bank of Atlanta, Lawrence Kotlikoff of Boston University, and Victor Yifan Ye, a researcher at Opendoor Technologies.
On the other hand, if you decide to take it as soon as you turn 62; Benefits for the rest of your life will be significantly reduced (30%) vs Waiting until full retirement age.
But Ramsey says you can more than make up for the shortfall by applying for Social Security benefits at age 62 and placing the entire amount of your check in a “quality mutual fund.”
“That one account will give you more than enough money to cover the difference with your money.” [age] 66 Accounts and your [age] 62 accounts,” Ramsey said on the podcast, before launching into a mini-rant about Social Security being a “broken system” and a “disaster.”
He did not say what constitutes “.”good mutual funds” or provide suggestions on how to find it. There isn’t a lot of information tracking the average performance of mutual funds over time. The main reason is that there are so many types of funds and their performance can vary widely.
A 2020 blog on the Credit Donkey site reports that investors have earned an average of 4.67% in mutual funds over the past 20 years. This was significantly below the performance of the S&P 500 index over the same period. Over the past 30 years, the S&P 500 index has achieved an average annual growth rate of 10.7%, The Motley Fool recently reported.
But for Social Security recipients who aren’t financial experts and can’t afford mutual funds, finding a “good” mutual fund can be difficult.
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Another thing Ramsey didn’t mention is that many Social Security recipients I rely on checks to pay my bills.And they can’t afford to invest in mutual funds in hopes of getting good returns in a few years.
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This article was first published GOBankingRates.com: Dave Ramsey: When you turn 62, you get Social Security, but only if you take it every time you get a check.