Sues Orman’s advice on social security makes more sense to most people.
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Suze Orman and Dave Ramsey are two financial masters who are trusted by many followers. Naturally, both have placed emphasis on the important issue of when to collect social security benefits. But their advice could not be further contrasted if they tried.
Ramsey and Orman both offer some good justifications for their proposal, but the reality is that Orman is probably right, and Ramsey is probably wrong in terms of the best advice for most Social Security Beneficiaries.
Let’s take a look at what each of these experts suggests. And let’s take a look at why listening to Orman is probably a better move in most cases.
Sues Orman says he will advocate social security at this age
Suze Orman recently took him to LinkedIn to give advice on when to claim Social Security. Specifically, Orman said that retirement benefits must begin after the retirement age of those born after 1960, which is 67 years old.
Orman explained that Social Security could be launched soon in 62, but that it should not. She said: “Don’t settle for reductions in Social Security benefits. If you’re healthy, the best financial move you can make is not to claim Social Security before you reach your full retirement age.”
Instead of claiming at a younger age, Orman recommends actually waiting until 70. It is the last age where you can delay and increase your profits.
That’s when Ramsey told him to get benefits.
Ramsey takes a very different approach. He is advised to advocate for Social Security benefits at age 62.
However, Ramsey encourages you to assert your interests at that age, but will not use them. Instead, you need to invest. He believes he needs to get a Social Security check as soon as possible and invest his money. Because you will earn better benefits than if you delay your claim and accept the increased profits that come with doing so.
Why Orman’s advice makes the most sense for most retirees
Ramsey’s advice may sound good in theory, but it’s not really great advice. For one thing, there is no guarantee that you will get a higher return and that if you invest your profits you will get more money.
Retirees are generally advised to move their portfolios away from the stock market as they age and approach the time when they have to rely on income retirement plans. That’s because they can’t afford to risk having a lot of money in the market during a recession.
The chance is good, so putting Social Security money into the market will give you an overweight share of stock as you already have a 401(k) invested in the stock market. Essentially, we’ll have to deposit an excess of nest eggs in the stock market in the bank and expect them to rise over the next eight years.
There is another problem too. Once you claim Social Security benefits, you can theoretically promise to pour yourself all of your own into an IRA or other retirement plan, but you have it and you may be tempted to do something else with money.
Ultimately, following Orman’s advice and delaying your Social Security claim will guarantee you will earn more money than you would have had to claim your benefits at age 62. Follow Ramsey’s advice and it may not happen.
Resignation plans should not be such a big gamble. And we should delay claims as much as possible to earn safer and inflation-protected income from Social Security.
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