Episode 372 – In the past few months, some social media “finfluencers” have suggested that it might be a good idea to collect your Social Security early and invest the money in the stock market. Does it actually work? We follow up on a recent article from The Wall Street Journal that covers the issue in detail.

Hello, this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode: should you collect Social Security and invest the difference?

A few weeks ago we did an episode on the concept of “buy term and invest the difference.” The idea is that rather than purchasing a permanent life insurance policy, you could, theoretically, buy a term policy and invest the difference in premiums into a diversified portfolio. The idea is that if things went well, you could be able to self-insure once the term policy expired. We explained some of the practical reasons why such an idea rarely works.

A similar concept has recently become popular for people considering their Social Security. The theory goes that instead of waiting, you should collect as early as possible, take that money and invest it in the stock market. In the end, its proponents argue, you’ll be better off.

It has even become a popular meme on TikTok and YouTube, and The Wall Street Journal recently took an in-depth look.[1] Perhaps not surprisingly, there are some potential issues with this approach.

Individual workers get to choose when they start collecting their Social Security benefit. They can collect as early as age 62, as late as age 70, or anytime in between. But there are tradeoffs. “Full Retirement Age,” the age at which you can collect your full unreduced benefit, is age 67 for most of us.

If you collect at age 62, you’re getting a five-year head start, but the tradeoff is that your lifetime benefit is reduced by 30 percent. If you wait until age 70, you’re collecting three years behind schedule, but your reward is that your benefit is 24 percent higher. For example, if your personal benefit at Full Retirement Age is $1,000 per month, you would get $700 if you started at age 62, or $1,240 if you started at age 70. The difference between 62 and 70 is about 77 percent.[2] For people who have reason to believe they’re going to live well into their 80s or beyond, it generally makes sense to wait as long as possible. If you live long enough, you’ll easily make up the difference, and then some, by waiting.

The “collect early and invest it” trend has gotten a lot of attention recently from people known as “finfluencers.” Market gains in the past few years have certainly fueled the movement.

So, what exactly is the problem with this approach? Volatility and sequence of returns risk are major issues. The market may do well in any particular year, but that’s no guarantee of anything financially.

According to Wall Street Journal columnist Jason Zweig, “Taking Social Security early just to invest the money in stocks is a dumb idea for most people.”[3] The reason? According to Zweig, if you’re a non-smoker in your early 60s with a college degree and a decent income, chances are that you will live into your mid-80s. And when you look at the amount of money you’re likely to receive over your remaining lifetime, the difference can be staggering.

One of most important features of Social Security is that your income is inflation-protected. Cost-of-living adjustments (COLAs) can make a huge difference over time. And the higher your starting amount, i.e., the longer you wait to collect, the bigger the COLA will be, at least in nominal terms.

COLAs are essentially risk-free. And few things, including the stock market, come with that kind of inflation protection. Social Security is, essentially, a form of longevity insurance. Zweig argues that Social Security and the stock market are two completely different things, and it makes no sense to try and compare them.

Either way, we’re talking about a relatively small subset of the American population: people with the flexibility to collect Social Security when they want to, not when they need to. Age 62 is the most popular claiming age,[4] and there’s a reason for that. Some people have no other choice. They simply need the money to survive.

And further, there’s something called the “Earnings Test.” Anytime you collect Social Security before Full Retirement Age, the amount you receive could be reduced if you’re trying to work and collect at the same time. It’s all very complicated but, for 2026, the so-called “earnings limit” is $24,480.[5] If your wages go over that limit, your benefit will be reduced $1 for every $2 over. So, if you’re a good earner, the Earnings Test could make it impractical for you to collect before Full Retirement Age, unless you’re also willing to give up your job. If you want, you can still employ the collect Social Security and invest the difference strategy, you just might have to start at 67 rather than 62.

For those who can afford it, Zweig makes an alternative suggestion. Choose to file later on and use some of your fixed income assets to help finance your cost of living while you wait to collect your Social Security. This is commonly referred to as a “bridge” strategy.[6]

So, is it possible that you would be better off if you collect your Social Security at age 62 and reinvest the money? As with “buy term and invest the difference,” it is hypothetically possible, but poses some hazards to be aware of.

[1] Zweig, Jason. “Are Stocks a Better Bet Than Social Security?” The Wall Street Journal. https://www.wsj.com/finance/investing/are-stocks-a-better-bet-than-social-security-873ab68a?mod=Searchresults&pos=2&page=1 (accessed January 26, 2026).

[2] Id.

[3] Id.

[4] Hagen, Kailey. “These 3 Social Security Claiming Ages Get More Popular Every Year.” Fool.com. https://www.fool.com/retirement/2025/02/16/3-social-security-claiming-ages-get-more-popular/ (accessed January 27, 2026).

[5] Social Security Administration. “2026 Social Security Changes.” SSA.gov. https://www.ssa.gov/news/en/cola/factsheets/2026.html (accessed January 27, 2026).

[6] Zweig, Jason. “Are Stocks a Better Bet Than Social Security?” The Wall Street Journal. https://www.wsj.com/finance/investing/are-stocks-a-better-bet-than-social-security-873ab68a?mod=Searchresults&pos=2&page=1 (accessed January 26, 2026).

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