'I have a monthly pension worth $11,000 and Social Security income of $4,000'

"I am at a crossroads." (Photo subject is a model.)

Dear Help Me Retire,

I am at a crossroads. I have a monthly pension worth $11,000 and combined Social Security income (with my wife) of $4,000. If I take Social Security at 63 and invest that money - and make an average of 6% a year - am I better off doing that in the long-run versus waiting until 70?

Invest or Delay

Dear Invest,

An $11,000-a-month pension is a substantial benefit, but whether you should invest your Social Security payments depends on whether you can afford to do so. You shouldn't put any retirement income at risk if you need it to cover housing, utilities, healthcare, groceries or other necessities.

If you have money left over and want to compare the trade-offs of claiming Social Security early and investing the proceeds versus delaying benefits and maximizing your monthly check at age 70, let's walk through an example.

The full retirement age $(FRA)$ for people born in 1960 or later is 67. For this example, we'll make a few assumptions.

First, let's assume you turned 63 in July 2026 and are exactly 63 years old. According to the Social Security Administration, someone who is exactly 63 would receive 75% of his or her full retirement benefit, compared with 100% at FRA.

Second, let's assume your Social Security benefit at FRA is $1,000 per month, simply to keep the math easy to follow. A $1,000 benefit is easier to work with when you're comparing contributions, rates of return and other variables. Of course, you can substitute your own estimated benefit from your Social Security statement to get a more accurate picture of how these strategies would affect you.

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Scenario No. 1: Claim early and invest

At age 63, you'd receive $750 per month in benefits. You can use any number of future-value calculators to experiment with different assumptions. For this example, I'm using AARP's investment-returns calculator because it allows you to adjust a variety of variables.

If you started with a $0 balance and invested $750 per month for 25 years, assuming a 6% annual rate of return and 3% inflation, you would accumulate a little more than $509,000 by 2051. This example assumes your monthly contributions remain fixed and do not increase with inflation.

I did not select the option to adjust contributions for inflation because Social Security's annual cost-of-living adjustment $(COLA)$ fluctuates from year to year. In fact, during the past 10 years, the COLA has reached or exceeded 3% only three times, according to the Social Security Administration.

Scenario No. 2: Delaying Social Security

Now let's say you decided to wait until age 70 to maximize your Social Security retirement benefits. The Social Security Administration increases benefits by about 8% for each year you delay claiming between your full retirement age and age 70, for a total increase of roughly 24%. That means you'd receive $1,240 per month beginning at age 70.

Because you would start collecting benefits seven years later than in Scenario No. 1, we need to shorten the investment period from 25 years to 18 years. Without accounting for future cost-of-living adjustments, the math is straightforward: $1,240 per month for 216 months (18 years) equals $267,840 in total benefits.

If you invested those payments for 18 years using the same assumptions - a 6% annual rate of return and 3% inflation, without inflation-adjusted contributions - you would accumulate a little less than $475,000, according to AARP's investment-returns calculator.

What to do

As you can see from these quick calculations, the outcomes in the two scenarios are not dramatically different. But, of course, several caveats apply.

The biggest one is that the stock market offers no guarantees. Markets rise and fall, and you could experience years of strong returns followed by years of steep losses. Those swings can occur at any time, whether you're just beginning to invest or need to withdraw money from your portfolio. You also need an asset allocation that aligns with your financial needs and goals, and you must monitor your portfolio regularly - though not obsessively.

Social Security, on the other hand, offers a more predictable return. Benefits are not tied to volatile investments, and the program rewards people who delay claiming beyond their full retirement age. The downside, of course, is that you can't simply tap into those funds whenever you want; you must apply for benefits before you can receive them.

You also need to consider factors such as longevity. Delaying Social Security until age 70 provides little benefit if you do not live much longer than that. The challenge, of course, is that no one can predict exactly how long they will live.

Finally, consider your actual financial needs. If your money is tied up in an investment portfolio, how easily could you access it in an emergency? What are the tax implications based on your income bracket and the amount of money you receive under either scenario, whether as investment income, Social Security income or both? Remember, Social Security benefits can also be taxable.

There's a lot to weigh here and, as you can see, there isn't one right answer. Only you can determine which approach best fits your circumstances.

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Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com.

-Alessandra Malito

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July 03, 2026 08:00 ET (12:00 GMT)

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