What's wrong with Dave Ramsey's Social Security advice?
Dave Ramsey tells most people to claim Social Security at 62 and invest every check in mutual funds. For retirees who genuinely need the income, claiming early is often the right call. But for those who don't need it to live on, this one-size-fits-all rule ignores guaranteed 8% annual growth, survivor benefits, taxes, and Medicare premiums. For a married household, that blind spot can quietly cost $60,000 or more over a retirement.
A client asked one of our advisors about this recently. They had been following Ramsey for years, had the debt snowball working, the budget tight, the whole plan. Then they got to Social Security and assumed the same simple rule would carry them through. From the conversations our advisors have every week, that is the moment a lot of disciplined savers get tripped up. Not because Ramsey is wrong about money. Because Social Security is a different kind of math.
Here is the thing. Dave Ramsey gives some of the best debt and wealth-building advice out there. But when it comes to when to turn on Social Security, his blanket rule leaves real money on the table for the people who can afford to be patient.
What Ramsey Actually Says
Most people assume Ramsey tells you to wait. He doesn't. His advice is the opposite.
On his show, answering a listener who asked whether to claim at 62 or hold out, Ramsey said:
"It usually makes sense to take it early if you're going to invest every bit of it."
His pitch is to take the smaller check at 62 and put all of it into a good growth mutual fund, betting the market will more than make up for the larger checks you would get by waiting.
And here is where we agree with him. If you need that money to cover your bills, take it at 62. We tell our clients the same thing. There is no medal for waiting while you drain your savings or white-knuckle every expense. On that point, Ramsey is right, and the "always wait until 70" crowd misses it.
Where the Plan Falls Apart
The trouble is the second half of his advice: "invest every bit of it." That quietly assumes two things that rarely both come true.
First, that you do not actually need the money to live on. Second, that you will really invest every check instead of spending it, and that the market will reliably beat a guaranteed 8% raise for every year you wait past full retirement age. That 8% is the kind of guaranteed return you simply cannot buy anywhere else, and it is the heart of what his rule glosses over.
Run the numbers on an average benefit. Say your full retirement age benefit is $2,000 a month. Claim at 62 and it drops about 30% to roughly $1,400. Wait until 70 and it grows 24% to about $2,480. Live to 85, and the person who waited collects close to $60,000 more in lifetime benefits. And that is before counting cost-of-living adjustments or what it means for a surviving spouse.
So for the retiree who does not need the check to pay the bills, "take it at 62 and invest it" is a bet against a sure thing.
The 6 Problems With Ramsey's One-Size-Fits-All Rule
His single rule skips over six variables that actually decide the right answer for your household. Here they are.
1. Longevity and Health
Every year you delay past full retirement age adds 8% to your benefit, guaranteed. If you are healthy and your family tends to live long, that is growth you cannot replicate with a mutual fund and no market risk. Cost-of-living adjustments then compound on top of the larger benefit. A 3% raise applies to your higher delayed number, not your original one, so the gap widens every year you live.
2. Spousal Coordination
With two earners, timing gets layered. Sometimes the lower earner claims early while the higher earner delays. Sometimes it is the reverse. This is not guesswork. The right software models your exact household and shows the dollar impact of each combination.
3. The Tax Torpedo
Social Security becomes taxable once your other income crosses certain thresholds, and there is a zone where each extra dollar of income can pull up to 85% of your benefit into taxable territory. That "tax torpedo" can push your effective tax rate far above your bracket. If you are doing Roth conversions or pulling from retirement accounts, when you turn on Social Security becomes central to your whole tax picture.
4. IRMAA and Medicare Surcharges
For households with serious retirement assets, Social Security timing feeds into your income, and your income drives your Medicare premiums through the Income-Related Monthly Adjustment Amount (IRMAA). In 2026, crossing the first IRMAA threshold, $109,000 for a single filer or $218,000 for a married couple, adds roughly $1,150 per person to your annual Medicare cost. For a couple, that is about $2,300 a year. And IRMAA is a cliff, not a slope. One dollar over the line triggers the full surcharge.
5. Still Working in Your Sixties
Plenty of our clients are still earning in their early sixties. If you claim before full retirement age and keep working, the Social Security earnings test withholds $1 of benefits for every $2 you earn above the annual limit ($24,480 in 2026). Claim early while you are still earning real income and you may hand a chunk of those checks right back.
6. Survivor Benefits
When the higher earner claims sets the floor for what the surviving spouse keeps for life. If you are the higher earner and you grab the reduced check at 62, you may be locking your spouse into a smaller benefit for decades after you are gone. Delaying is not only about you. It is protection for the person you leave behind.
The Honest Version of the Rule
The clients who get this right do not follow a rule at all. They start with one question: do we need this money to live on right now?
If the answer is yes, claim early, just like Ramsey says, and do not lose sleep over it. If the answer is no, the smarter move is usually to let the benefit grow at a guaranteed 8% a year while you bridge the gap with other assets.
From there, a few more questions shape the timing:
- What does our health and family longevity actually look like?
- How will turning on Social Security change our taxes over the next 20 years?
- What happens to the surviving spouse?
- Will it push us over an IRMAA threshold and raise our Medicare premiums?
We have watched couples coordinate who claims when and pick up an extra $40,000 to $60,000 in lifetime benefits, money that was sitting there the whole time, just waiting for someone to do the math.
Taking Control of Your Strategy
Here is where to start:
- Decide the real question first: do you need the income now, or can it grow? Everything flows from that.
- Look at the whole household, not Social Security in isolation. Pull your benefit estimates from the Social Security Administration.
- Map the tax and Medicare impact, especially if you are doing Roth conversions or have other retirement income.
- If you are married, model both claiming ages together. The survivor benefit alone can change the answer.
The real question is not "62 or 70." It is whether you want a simple rule or the strategy that actually fits your household.
That is the work our advisors do every day. They look at the whole picture, your Social Security, your retirement accounts, your Medicare costs, your tax situation, and help coordinate all of it. If you want a second set of eyes on your timing, give us a call. No pressure, no pitch. Just a straight conversation about what makes sense for your situation.
Easy Eddie's Take
Here is what I tell folks: Dave Ramsey is great for getting out of debt, but Social Security is not debt advice. It is math. Every situation is different. Maybe you claim early because you need the money. Maybe you wait because you are healthy and still working. Maybe you and your spouse do different things at different times. The best strategy is the one that fits YOUR situation, not what works for everyone else. Don't leave money on the table because you followed someone else's rule.
Disclaimer: The information in this article is for educational purposes only and does not constitute tax, legal, or investment advice. Tax laws change frequently, and individual circumstances vary. American Retirement Advisors does not provide tax or legal services. Before making any tax-related decisions, consult a qualified CPA, tax attorney, or financial planner who can evaluate your specific situation.