Americans are increasingly afraid they won’t receive the Social Security benefits they’ve contributed to, throughout their careers.
According to The Associated Press, Social Security will be unable to pay full benefits to recipients starting in 2035. At this rate, it will only be able to pay 83% of benefits unless the government makes some policy changes.
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The Social Security Administration (SSA) explains that taxes paid into Social Security go toward people who are already retired, people with qualifying disabilities, survivors of workers who have died, and dependents of beneficiaries. They don’t go into a personal account for contributors to receive in retirement.
Amid fears that contributors won’t receive adequate Social Security funds, financial guru Dave Ramsey recommends that Americans claim Social Security benefits early. In contrast, other financial experts urge them to wait as long as possible to garner a larger monthly paycheck.
Ramsey says the best strategy for most Americans is to start claiming Social Security benefits at age 62. He believes this approach will allow individuals to access their money sooner, enabling them to invest it in mutual funds to gain potentially higher returns.
Ramsey claims that Americans can overcome lower monthly payments by investing early and compounding their investments.
He points out that the Social Security system is fundamentally flawed and unreliable, describing it as a “broken system” and a “disaster.” Ramsey urges people not to rely on it as their primary source of retirement income.
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According to Ramsey, the uncertainty surrounding the future of Social Security makes it prudent to take the money as soon as possible and make it work for you through smart investing.
Contrary to Ramsey’s advice, most financial experts recommend waiting until full retirement age — typically 66 or 67 — or even delaying until age 70.
Delaying benefits results in a significantly larger monthly payout — up to 132% of the monthly benefit if you wait until age 70, according to the SSA.
Financial planners argue that for those in good health with a longer life expectancy, waiting can provide a more financially stable future. Larger monthly paychecks from waiting can help cover increasing health care costs and other expenses in retirement.
Many people are concerned about whether Social Security will be available when they retire. While the system faces challenges, SSA Chief Actuary Steve Goss assures Americans that despite the risk of reduced benefits, Social Security Trust Funds won’t run out of money.
According to Ramsey’s guidance, the fear of this program’s demise is enough reason to claim as early as possible to mitigate the risk of potential future reductions in Social Security payouts.
So, should you claim early?
Deciding when to claim Social Security is a personal decision, depending on various factors, including health, current financial status, and retirement goals.
Ramsey says those who are financially savvy and capable of managing investments can benefit from claiming early. But it’s important to consider the trade-offs, such as lower monthly payments.
Financial experts recommend creating a comprehensive retirement plan that incorporates Social Security as one of several income streams.
As Social Security faces uncertainties, retirees and other recipients must carefully weigh their options.
If Social Security trends continue as projected, should retirees follow Ramsey’s advice and claim benefits early? Or are they better off waiting until full retirement age to claim the largest possible portion of Social Security?
The answer lies with you. When expert opinions vary drastically, it’s important to consult your financial advisor to determine the best approach for your unique circumstances.
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This article Social Security Fears Go Viral: Should You Claim Early Like Dave Ramsey Says? originally appeared on Benzinga.com
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