The Risky Gamble of Taking Social Security Early to Invest

Should You Claim Social Security at 62 and Invest the Money? (Or: How to Gamble with Your Golden Years)

Oh, sure, one of your most critical retirement decisions is when to start collecting Social Security benefits. You can begin claiming Social Security as early as 62—because who doesn’t want to get their hands on that sweet government cash as soon as humanly possible? There’s just one tiny trade-off: the longer you wait (up to age 70), the larger your monthly retirement benefits. But who needs larger checks later when you could have smaller ones now, right?

Many financial advisors have the audacity to warn against filing for Social Security at 62 because it “permanently reduces your benefits.” How thoughtful of them. But wait—what if you’re a financial genius who can outsmart the entire Social Security system? Couldn’t you claim early and invest those payments instead of waiting?

Technically, yes—in the same way you could technically survive jumping out of a plane with a parachute made of bedsheets.

Understanding the Financial Impact of Filing Age (Or: Math That Will Make You Cry)

Let’s look at a practical example, shall we? If you’re entitled to a $2,000 monthly Social Security benefit at age 67 (full retirement age for anyone born in 1960 or later), here’s what happens:

• Filing at 62 would shrink your monthly benefit to $1,400—a 30% reduction. But hey, who needs that extra $600 a month anyway?
• Waiting until 70 would grow your monthly benefit to nearly $2,500—a 25% increase. But that requires patience, and we all know patience is for people who don’t have immediate vacation plans.

The challenge is that none of us knows exactly when we’ll die. Inconvenient, isn’t it? If you knew you’d only live a short time after early retirement, claiming Social Security at 62 would make perfect sense. If you knew you’d live to 100, waiting until 70 would be obvious. Unfortunately, the Grim Reaper doesn’t send save-the-date cards.

The Investment Gamble: Why It’s Risky (Or: How to Turn Guaranteed Money into Maybe Money)

Could you claim Social Security at 62, invest those checks, and end up with more money? Sure, and monkeys might fly out of your retirement portfolio.

Here’s the problem: When you invest your Social Security benefits in the market, returns are about as predictable as a cat on caffeine. You might earn impressive gains—or you could lose money faster than a tourist in a casino.

In contrast, delaying Social Security gives you a guaranteed return. For every year you postpone benefits past 62, you’re assured a specific percentage increase. This is essentially a risk-free investment with a known outcome. But where’s the thrill in that?

When Early Filing Makes Sense (Or: Reasonable Excuses for Unreasonable Decisions)

If you’re claiming Social Security at 62 because you need to escape a physically demanding job or genuinely need the income—that’s completely understandable.

But filing early solely to invest the money? That’s like declining a guaranteed raise at work so you can play the lottery instead. Why take this gamble when there’s a completely risk-free way to grow your benefits? Oh right, because you’re clearly smarter than the entire Social Security Administration.

If you end up claiming Social Security later, you can still invest any surplus. The advantage is starting with larger monthly payments—those bigger checks provide greater security should your brilliant investment strategy somehow fail to outperform Warren Buffett.

Remember, Social Security is designed to be the reliable foundation of your retirement income—not your personal hedge fund seed money. But hey, it’s your retirement. What could possibly go wrong?