It’s the age-old dilemma that arises once one enters one’s 60s: Should one take Social Security sooner or put it off to receive a fatter payment later?

At the end of the day, delaying things like Social Security benefits can be met with far greater rewards at some point down the road. That said, delaying gratification isn’t always the best answer when one enters one’s later years.

Indeed, in one’s early-to-mid 60s, one reaches a point where putting things off may not be the best course of action. In fact, if one has a sizeable enough nest egg, cracking it open makes the right move. Of course, it all depends on where you stand financially, your lifestyle, and how long you expect to live.

In this piece, we’ll tune into the case of a 61-year-old who’s a year away from being eligible to take Social Security benefits. With a fair income coming in ($4,400 per month) and a very modest amount of savings ($190,000), the individual is wondering if they should take Social Security benefits at the minimum eligible age (62) and invest it.

Undoubtedly, if you take Social Security benefits sooner rather than later, you’ll receive less. Still, if you can score a better return (more than 8%), opting in and investing could be the best move.

Of course, it’s an aggressive pathway that not every retiree will be comfortable with. When you’re in your 60s, you can’t take on as much risk as you did in your 20s or 30s. Everyone’s risk tolerance and craving for returns will be different. That’s why I’d suggest consulting a certified financial advisor before making a move that will set the tone for the rest of one’s retirement.

Investing Social Security in stocks can make sense, but it can be a risky move.

Some of the more aggressive retirees may wish to take a page out of financial guru Dave Ramsey’s playbook. He thinks the best move is to take Social Security sooner (rather than later) while using the proceeds to invest in the stock market.

In my prior piece, I covered Ramsey’s advice of taking Social Security at 62, noting the pros and cons of doing so. Of course, the biggest pro is that you’d end up with more cash for your retirement, especially if stocks continue to gain at an above-average rate.

However, on the flip side, the stock market doesn’t always gain by high-double-digit percentage points. Arguably, too many investors have been too conditioned to expect significant gains from stocks after two consecutive years of returns north of 20%. The fact of the matter is that stocks will not always go up in a straight line.

While 10% (or so) returns may be the expectation for annual stock market gains, the reality is that returns will be far above or well below that “average” expected return.

In these past two years alone, we’ve seen the S&P 500 rise more than 53%. That’s impressive. If you claimed Social Security at the start of 2023, you’d be miles ahead than if you’d chosen not to claim it (you’ll get an 8% bump every year you don’t take Social Security past 62).

Looking into the rearview mirror will do you no good when planning for the future. In fact, there’s reason to believe that strong stock gains in 2023 and 2024 could mean weaker performance for the next two years or even the next decade. Some pundits believe the stage is set for a correction in 2025. And while it’s impossible to time the market, I do not think it’s at all out of the ordinary for a 15-20% sell-off to hit at some point in the near future.

If you can’t handle that kind of volatility, it makes more sense to simply collect your 8% per year by delaying Social Security past the age of 62. Remember, it’s a risk-free 8%, as I pointed out in my prior piece covering Suze Orman’s advice on when one should take on Social Security (she thinks delaying as long as possible is the best move).

What do Wall Street pros see for stocks in 2025?

For 2025, Wall Street pros expect a wide range of outcomes, with UBS calling for the S&P 500 to climb to 6,400 next year. And that’s just on the low end. On the high end, Oppenheimer is looking for the major stock index to hit the 7,100 level. These price targets entail returns between 9% and 21% for 2025—far above the 8% bump you’d get from delaying Social Security.

Do take such market predictions with a grain of salt, though, as even the pros can get it wrong in a big-time way.

So, am I leaning more toward Ramsey (opt-in and invest) or Orman (delay, delay, delay) regarding Social Security?

For someone healthy and about to turn 62, I’d rather go with Orman’s advice by delaying Social Security for as long as possible. While you don’t need to wait until 70 to opt in, I do think that taking the cash at 62 with the intent to invest is too risky a move, especially after two straight years of incredible gains. By doing so, you’d be foregoing a pretty decent guaranteed return to take a chance on stocks that are arguably mildly overvalued and due for a pullback at some point.

The bottom line

Stocks will not gain over 20% every year. They can realistically drop by a single-digit or even double-digit percentage in any given year, a significant setback that would cause many retirees to regret their decision to forego 8% by simply sitting on their hands when they’re eligible for Social Security. As always, meet up with an advisor so they can better understand your risk profile and help you make the best move.

Ultimately, it comes down to whether you’d be content with receiving an 8% bump on Social Security per year by not opting in at 62 or if you’re willing to take a chance by opting in and investing in the markets, which could realistically outperform over the next 10 years despite calls for a “lost decade” from some of the more bearish pundits out there.

In short, know what you stand to gain and the level of risk you’ll need to take.

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