Selling investments to fund early retirement avoids Social Security earnings penalties, but retirees must navigate permanent benefit reductions and potential tax impacts on their income.
The S&P 500's nearly 40% rise over two years is mentioned as context for retirement planning.
As the S&P 500 records a 38% gain since 2024, many 63-year-olds are weighing early retirement. While selling investments to replace a paycheck does not trigger Social Security's earnings test, early filing permanently reduces monthly benefits to 75% of the full amount. Retirees must balance portfolio withdrawals with tax implications and the two-year gap before Medicare eligibility.
No, selling investments does not trigger the Social Security earnings test, which only applies to wages and net self-employment income.
Claiming at 63 locks in a permanent reduction, providing only 75% of the benefit you would receive at your full retirement age of 67.