Dave Ramsey Answers a WEIRD Social Security Question (#209)

Financial Advisors Say The Darndest Things

Episode Summary: In this episode of "Financial Advisor: Say the Darndest Things," host AB Ridgeway explores a caller's dilemma regarding Social Security benefits. The caller, who just turned 68, is contemplating whether to begin receiving benefits now or wait until age 70. AB and Dave Ramsey provide insights into the financial implications and considerations involved in this decision.

Key Takeaways:

1. Delayed Retirement Credits (DRCs): Waiting to receive Social Security benefits beyond full retirement age accrues delayed retirement credits, increasing the monthly benefit by approximately 8% per year. However, the decision to delay must consider the time it takes to break even and personal financial circumstances.
2. Investment Considerations: While delaying benefits may result in higher payouts, investing the funds instead can potentially yield greater returns, especially considering individual risk tolerance, investment knowledge, and market conditions.
3. Realistic Expectations: Financial planners emphasize the importance of realistic expectations regarding investment outcomes. While taking Social Security benefits early and investing them is an option, it's crucial to avoid overestimating potential returns and to acknowledge the unpredictability of the market.
4. Benefit Estimate Letter: Utilizing resources such as the Social Security Administration's benefit estimate letter can assist individuals in making informed decisions about when to begin receiving benefits. Accessing this information early enables better financial planning.
5. Personal Decision: Ultimately, the decision to claim Social Security benefits is highly personal and should align with individual financial goals, needs, and circumstances. There is no one-size-fits-all approach, and individuals should carefully evaluate their options before making a decision.

Quotes:

1. "To determine how long will it take to even break even if she delays it and how much will she actually get if she starts taking it now?"
2. "Once you crunch the numbers, it becomes clear that taking the money now and having control of it is going to be in your favor."
3. "She should take it out and do something with it. But as far as giving her the expectation that she's going to outperform what would happen if she kept it in her social security, I think that's a little too far."

0:00 - Introduction

0:10 - Should I take out Social Security Now or Wait?

1:55 - When will you break even for your Social Security Benefits?

2:55 - Dave Breaks Down the Social Security Calculations of the caller

3:03 - A.B. Ridgeway doesn't agree with Dave Ramsey

5:39 - How to Find Out How Much Social Security Benefits You'll Receive

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