"On one podcast where a caller asked when to claim Social Security, Ramsey suggested that the caller start his benefits at 62 - but for an unusual reason. Ramsey advised that the caller start his benefits as soon as he could to invest the money. The theory is that if you put your money into mutual funds that give you exposure to equities, you can earn more money than if you just left your benefit alone to grow."
"Of course, your benefit does increase if you delay claiming it. For each month you delay beyond age 62, your benefit gets a little bit bigger, either because you're not getting hit with early filing penalties that apply for claims before your full retirement age, or because you are earning delayed retirement credits that become available for each extra month of delay beyond your FRA."
Claiming Social Security at the earliest eligibility age (62) provides immediate cash flow that can be invested in equities or mutual funds with the aim of earning higher returns than guaranteed delayed retirement credits. Delaying benefits increases monthly payments through avoided early-filing penalties and accrual of delayed retirement credits, which are guaranteed. Early claiming ensures receipt of benefits before death, reducing the risk of dying before ever collecting. The strategy requires accepting market and investment risk and trades guaranteed actuarial increases in benefits for potential higher investment returns and earlier income.
Read at 24/7 Wall St.
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