Should You Claim Social Security Early and Invest It?
Should You Claim Social Security Early and Invest It?
Kailey Hagen, CFP, The Motley FoolSun, March 1, 2026 at 10:05 PM UTC
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Key Points -
Investing carries risk, but it could also leave you with more money than you would've had otherwise.
Delaying your Social Security application will also increase your checks by 5% to 8% per year.
Even if you invest your checks, you could still owe Social Security benefit taxes.
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You're approaching age 62. While you've heard the warnings about how claiming Social Security right away can reduce your checks, you also don't want to wait too long and potentially miss your opportunity to claim benefits altogether.
You're thinking about claiming early and then investing your benefits until later when you actually need the money. While there's nothing to stop you from doing this, it's important to understand the risks before you go ahead.
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There's always a risk with investing
Investing your Social Security checks could potentially result in more money for you than you would've had otherwise, but it's important to remember this isn't a guarantee. Investment carries risks, and the potential for loss is always there.
While many investments go up over the long term, they can be volatile in the short term. So investing your Social Security checks may not be your best option if you plan to leave them invested for only a year or two.
Instead, you can simply delay your Social Security checks to guarantee yourself larger benefits. Your checks will grow by 5% to 8% per year for every year you delay benefits until you reach age 70.
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This is a predictable, guaranteed increase. However, if you keep your Social Security checks invested for seven to 10 years and they earn a 10% average annual return, you'll come out ahead compared to delaying your Social Security application. So the right move for you depends on your timeline and your risk tolerance.
Social Security benefit taxes could be a problem
If you're collecting Social Security and your provisional income exceeds $25,000 for an individual or $32,000 for a married couple, you'll owe federal Social Security benefit taxes on up to 85% of your checks. This could add thousands of dollars to your tax liability for the year. Residents in eight states could also face state Social Security benefit taxes.
This doesn't always mean you'll get a tax bill, though that remains a possibility. If you've already invested your Social Security checks, you won't be able to rely upon that money to help you cover those extra taxes. So you'll need to make sure you have other retirement savings to cover those costs.
If you're concerned about how claiming and investing your Social Security benefits could affect your taxes, consult with an accountant who can give you personalized advice. Then you can decide whether it's the right approach for you.
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