Orman’s Take: Good Things Come to Those Who Wait

Suze Orman recently shared her thoughts on LinkedIn about when to take Social Security benefits, and her message was crystal clear. She understands the temptation to claim benefits early. Many people feel that pull toward immediate financial relief. But if you were born after 1960, your full retirement age sits at 67 according to Social Security Administration guidelines. Orman gently reminds us that even reaching that milestone isn’t necessarily the finish line.

“Don’t settle for a reduced Social Security benefit,” she emphasized. “If you are in good health, the best financial move you can make is to not claim Social Security before you reach your full retirement age.”

But she goes even further than that. Orman’s ideal scenario involves waiting until age 70 to start collecting Social Security payments. Why 70? That’s when you’ve maxed out your delayed retirement credits. Based on 2024 regulations, these credits stop accumulating after age 70, meaning there’s literally no financial benefit to waiting longer. Think of it as reaching the point where you’ve squeezed every possible advantage out of patience.

Ramsey’s Opposite Strategy: Grab It Early, Invest Everything

Dave Ramsey takes a completely different approach to Social Security timing. His philosophy? Claim your benefits at 62, the earliest possible moment. Here’s the twist that might surprise you: he doesn’t want you spending that money on daily expenses.

Ramsey’s plan involves immediately investing every single Social Security dollar you receive. The idea sounds compelling when you’re worried about leaving money on the table. By investing those benefits for eight years (from 62 to 70), you might generate returns that beat what you’d get by simply waiting for bigger monthly payments.

It’s like taking control when everything else feels uncertain. Instead of letting the government hold your money and provide guaranteed increases, Ramsey figures you can do better by taking charge. You put those Social Security funds to work in the market yourself.

Why Playing It Safe Usually Makes More Sense

Look, I understand if Ramsey’s investment approach sounds appealing, especially if you like having control over your money. But there are some real-world challenges that make Orman’s strategy more practical for most people when deciding when to take Social Security.

The fundamental difference comes down to guarantees versus hope. When you delay your Social Security claim, you’re getting a guaranteed return through delayed retirement credits. According to SSA guidelines, these increases are locked in at 8% per year for each year you delay past full retirement age until age 70. They’re protected against inflation and completely risk-free. Can you honestly say the same about stock market investments over any eight-year stretch?

Here’s the thing about human nature. Once those Social Security checks start hitting your bank account, the temptation to spend rather than invest becomes very real. You might start at 62 with every good intention of investing each penny. But life happens. Unexpected expenses pop up. Maybe you see something you want that seems reasonable to buy with this “extra” money.

The Problem with Putting All Your Eggs in Market Baskets

There’s another major concern with the early-claim-and-invest approach that often gets overlooked. Most people nearing their 60s already have substantial money invested through 401(k)s, IRAs, and other retirement accounts. Adding Social Security benefits to your investment mix creates way too much concentration in market-based assets.

Financial advisors typically tell you to dial back your stock market exposure as you get closer to retirement. There’s real wisdom in that advice. This shift toward more conservative investments protects you from getting devastated by a major market crash right when you need to start pulling money out for living expenses.

But if you’re investing your Social Security benefits? You’re essentially doubling down on market risk during the exact life stage when you should be reducing it. You might feel like you’re being too cautious, but protecting your future self matters.

Think about it this way: if you’re already counting on your 401(k) and IRA to fund part of retirement, why would you want your Social Security dependent on market performance too? You’re putting way too much faith in the same potentially unstable foundation.

The Numbers Tell the Real Story

Let me break down the math in a way that might help with this decision about how to maximize Social Security benefits. Based on 2024 regulations, here’s how the timing affects your monthly payments:

• Claim at 62: Benefits get permanently reduced by about 25-30% compared to your full retirement age amount
• Claim at full retirement age (67): You receive 100% of your primary insurance amount (PIA)
• Wait until 70: Benefits increase by roughly 32% above what you’d get at full retirement age

So someone entitled to $2,000 monthly at full retirement age would only get around $1,400-1,500 by claiming at 62. But wait until 70, and that same person could collect about $2,640 monthly. Over a 20-year retirement, we’re talking about hundreds of thousands of dollars in guaranteed income difference.

For Ramsey’s strategy to actually work out better, your investments would need to consistently beat these guaranteed increases. And that’s while starting from a reduced benefit amount. Historical market returns suggest it’s possible, sure. But it’s far from certain, especially when you consider sequence of returns risk—the danger of poor market performance early in retirement.

When Certainty Beats Speculation Every Time

Retirement planning shouldn’t feel like you’re gambling with your financial security. The beautiful thing about Social Security is its predictability. It adjusts for inflation through cost of living adjustments (COLAs), it’s guaranteed for life, and it’s backed by the federal government. These features make it incredibly valuable as the foundation of your retirement income plan.

Investment returns can definitely enhance your retirement lifestyle. I’m not suggesting you avoid them entirely. But they shouldn’t be your primary strategy for maximizing your most reliable income source. Orman’s approach recognizes that Social Security serves as the bedrock of retirement security for most Americans. Optimizing that guaranteed income should come before market speculation.

Those delayed retirement credits you earn by waiting represent some of the best risk-free returns you’ll find in today’s financial world. Why gamble with market ups and downs when you can lock in substantial, guaranteed increases to your lifetime income? You’ve worked hard for this security.

Making the Right Choice for Your Situation

The truth is, when it comes to Social Security timing, the conflicting advice from financial experts can feel overwhelming. Two of America’s most trusted financial voices offer completely opposite guidance on this life-changing decision. This disagreement probably mirrors the confusion many people feel right now.

You might wonder if there’s a perfect answer. The reality is that deciding when to claim Social Security feels challenging because you’re essentially choosing between security and hope. One path offers peace of mind. The other asks you to bet your golden years on variables you can’t control.

Key Factors to Consider

• Your health status and family longevity history
• Current financial needs and other income sources
• Marital status and spousal benefit considerations
• Overall retirement portfolio and risk tolerance

A common mistake is overthinking this decision to the point of paralysis. Many people find that understanding the basic trade-offs helps clarify their personal situation. If you’re in good health and have other income sources to bridge the gap, waiting often makes sense. If you need the money now or have health concerns, claiming earlier might be the right choice.

The best age to collect Social Security benefits varies by individual circumstances. But for most people, the guaranteed increases from delayed retirement credits provide more value than the uncertainty of market-based strategies. Your Social Security benefits represent decades of contributions. Maximizing that reliable income stream deserves careful consideration.

For personalized guidance on your specific situation, consult SSA.gov or speak with a Social Security representative who can review your earnings history and projected benefits.