Suze Orman Is Right and Dave Ramsey Is Wrong About Social Security

Key Points

• Suze Orman and Dave Ramsey have both given advice about when to apply for Social Security.

• The financial advice given by the two experts is at opposite ends of the scale.

• Ramsey's advice is unrealistic for most seniors.

• The $23,760 Social Security bonus most retirees completely overlook ›

Suze Orman and Dave Ramsey are two financial gurus who are trusted by many followers. Unsurprisingly, both have weighed in on the key question of when to start collecting Social Security benefits. However, their advice could not contrast more if they tried.

Although Ramsey and Orman both provide some good justifications for their suggestions, the reality is that Orman is probably right and Ramsey is probably wrong in terms of which advice would work best for the most Social Security recipients.

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Let's take a look at what each of these experts suggests, and some reasons why listening to Orman would probably be the better move in most cases.

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Suze Orman says to claim Social Security at this age

Suze Orman recently took to LinkedIn to provide some advice on when to claim Social Security. Specifically, Orman said you should start your retirement benefits after your full retirement age, which is 67 for those born after 1960.

Orman explained that you can start Social Security as soon as 62, but that you shouldn't. She said: "Don't settle for a reduced Social Security benefit. 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."

Instead of claiming at a younger age, Orman actually recommends waiting until 70. That's the last age when you can increase your benefit by delaying.

Here's when Ramsey says to get benefits

Ramsey has taken a very different approach. He's advised claiming Social Security benefits at the age of 62.

However, Ramsey urges you to claim your benefits at that age but not to spend them. Instead, you should invest them. He believes you should start getting Social Security checks as soon as you can and invest the money because you will get a better return than if you just delay your claim and accept the benefits increases that come with doing so.

Why Orman's advice makes the most sense for most retirees

While Ramsey's advice may sound good in theory, it's not great advice in practice. For one thing, there's no guarantee that you are going to be able to earn higher returns and end up with more money if you invest your benefit.

Retirees are also generally advised to start shifting their portfolio away from the stock market as they get older and draw nearer to the time they have to rely on their retirement plans for income. That's because they can't afford the risk of having too much money in the market during a downturn, losing a ton of it, and then having to start pulling cash out to live on.

Since chances are good you already have a 401(k) with money invested in the stock market, putting your Social Security money into the market too is going to give you an overweighted stake in equities. You will basically be banking an excessive amount of your nest egg in the stock market and counting on it going up during the next eight years.

There's another issue too. Once you claim Social Security benefits, you can theoretically promise yourself you're going to funnel all that money into your IRA or some other retirement plan, but you may end up really tempted to just do something else with the money since you have it.

Ultimately, if you follow Orman's advice and delay your Social Security claim, you are guaranteed to get more money than you would if you claimed your benefits at 62. If you follow Ramsey's advice, there's a chance that won't happen.

Retirement planning shouldn't be such a big gamble, and you should delay your claim as long as you can to earn more safe, inflation-protected income from Social Security.

The $23,760 Social Security bonus most retirees completely overlook

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