Bruce Helmer and Peg Webb

From time to time, we get a listener question on our Sunday morning show on WCCO that opens the door to a much larger financial planning conversation. This is one of those questions:

“I’m 62. I don’t need Social Security to live on. Should I take the benefit now and invest it for better returns?”

You may have recently heard versions of this argument on social media or financial podcasts. The logic sounds straightforward: the stock market has historically delivered strong long-term returns, so why not claim Social Security early and put that money to work?

The problem is that this comparison often oversimplifies what Social Security actually is and underestimates how much risk and leverage already exist in today’s financial markets.

Social Security is not just another income stream

Social Security is fundamentally different from an investment portfolio. It provides something markets do not offer on their own: government-backed, inflation-adjusted income for life. That income continues regardless of market performance, inflation trends, or how long you live.

Claiming benefits at age 62 permanently reduces that income by about 25% to 30% compared with claiming at full retirement age. That reduction lasts for the rest of your life and can also affect survivor benefits for a spouse.

This is why the decision to claim Social Security is not a short-term trade. It is a permanent planning decision.

The built-in leverage of delaying benefits

One of the most overlooked aspects of Social Security is the financial leverage built into delaying benefits. When you wait to claim, you increase a guaranteed, inflation-adjusted paycheck without borrowing money, without market volatility and without behavioral risk.

For example, delaying benefits until age 70 can result in a monthly benefit roughly 77% higher than starting at age 62. That’s not market leverage, it’s planning leverage. And unlike market leverage, it is designed to stabilize outcomes rather than amplify risk.

Why “I’ll just invest it” isn’t clean math

The argument for claiming early usually assumes that stocks will outperform Social Security over time. While that may be true in some scenarios, it overlooks several important factors.

First is sequence-of-returns risk. It is not enough for markets to deliver strong long-term averages. Returns need to be favorable early and consistent. Poor market performance in the first several years of retirement can permanently damage your purchasing power, especially if you’re compelled to take withdrawals.

Second, investing Social Security benefits converts a guaranteed income stream into a market-dependent outcome. You are voluntarily trading certainty for volatility at a stage of life when recovery time matters more than ever.

Markets already carry leverage

Many investors think of leverage only in terms of margin loans, but modern markets are already leveraged in less obvious ways. Corporate debt levels, private equity structures, derivatives and even concentration within major stock indexes all introduce leverage into stock portfolios.

For retirees, this matters because leverage cuts both ways. When markets decline, leverage can magnify losses. Required withdrawals during downturns can compound the damage, particularly when there is limited time to recover.

This is why income decisions deserve special care. If a portfolio already contains embedded leverage, the income strategy should emphasize stability rather than additional risk.

The behavioral and tax dimensions

This question often reflects more than just return calculations. Many retirees worry about missing out on growth or assume guaranteed income equals underperformance. In reality, Social Security does not replace investing, it supports it.

A stable income stream can reduce the need to sell investments during market downturns and make it easier to stick with a long-term plan when volatility strikes.

Taxes also matter. Delaying Social Security may lower taxable income in early retirement years, creating opportunities for strategies such as Roth conversions. Investing the benefit, by contrast, may introduce additional tax friction, since benefits and investment returns can both be taxable.

Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.

When claiming early can make sense

There are situations where claiming Social Security at 62 is appropriate, including shortened life expectancy, limited survivor considerations or immediate cash-flow needs. But these should be planning-driven decisions, not market bets.

Instead of asking, “Can I earn more by investing my Social Security?” a more useful question is: “What role do I want Social Security to play later in my retirement?”

We certainly do not want to give the impression that we are in any way against having a significant proportion of retirement funds in market-based accounts. Far from it. We are considering the narrow question of whether it makes sense to claim Social Security benefits early and invest them in the stock market. For most people, the answer is no. In markets already filled with leverage and volatility, Social Security remains one of the few tools intentionally designed to add stability. That is a feature worth valuing.

Related Articles

Your Money: Career pivots: The financial side of seeking greener pastures

Your Money: Markets were up in 2025, will it continue?

Your Money: Helping children build healthy money habits

Your Money: A simple financial health check for any age

Your Money: Resolution: New year, no (bad) debt

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on WCCO 830 AM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com. Advisory services offered through Wealth Enhancement Advisory Services LLC, a registered investment adviser and affiliate of Wealth Enhancement Group.