The S&P 500 Rose Nearly 40% in Two Years as the 55+ Workforce Rate Shrunk. At 63, Selling Investments to Retire Early Isn’t Social Security Earnings.
At 63, a strong brokerage account can make leaving the office feel like a real plan, but the rules connecting investment sales, Social Security claims, and taxes create a set of traps that catch retirees who assume the math is…
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You are 63. Your brokerage statement looks better than it did two years ago, the office feels heavier than it used to, and walking away has started to feel less like a fantasy and more like a plan. The S&P 500 has been setting fresh records in 2026 and is up nearly 38% from about this time in 2024. Meanwhile, the labor-force participation rate for Americans 55 and older stood at 36.9% in July.
Those numbers do not prove the market is pushing older Americans into retirement. They do frame a common question: if a 63-year-old quits working, claims Social Security and sells investments each month to replace his paycheck, will those sales trigger the rules that penalize people who keep working? No. Social Security does not treat investment sales as work.
Why the Brokerage Account Is Invisible to the Earnings Test
The retirement earnings test applies before full retirement age (FRA), which is 67 for someone turning 63 in 2026. This year, Social Security withholds $1 in benefits for every $2 of earnings above $24,480 for someone below FRA all year. The key is earnings. Social Security counts wages from a job and net earnings from self-employment. It does not count pensions, annuities, interest or investment income toward that limit.
Selling stock from a personal investment portfolio therefore does not become Social Security earnings just because the money replaces a paycheck. Even a large sale that produces a capital gain can leave the earnings test untouched. A part-time consulting job is different. Net self-employment income can count. Social Security cares about where the money came from, not which bill it pays.
Claiming at 63 Is the Bigger Decision
Escaping the earnings test does not make claiming early free. For someone born in 1960 or later, starting Social Security at exactly 63 pays 75% of the full-retirement-age benefit. If his benefit at 67 would be $2,500 a month, filing at 63 puts him near $1,875.
Waiting to 67 restores the full $2,500. Waiting beyond FRA earns delayed retirement credits of 8% a year until 70, when that same $2,500 benefit would reach about $3,100 before future cost-of-living adjustments. The increase from 63 to 67 comes from avoiding more of the early-claiming reduction. The 8% delayed retirement credits apply only after full retirement age. A strong brokerage account can give the worker another source of cash while he waits. That is the decision worth modeling before filing (we condensed the 62-versus-67-versus-70 math into a free one-page framework here).
Social Security May Ignore the Sale. The Tax Return Will Not.
Selling investments still has consequences. Only the gain, not the full sale proceeds, is potentially subject to capital-gains tax. Once Social Security starts, investment income can also help determine whether part of the benefit becomes taxable. Depending on total income, up to 85% of Social Security benefits can be included in taxable income.
Some retirees use the years between work and Social Security to spend from taxable accounts or make Roth conversions. Those moves can change the tax bill even though they are not wages for the Social Security earnings test. Health insurance belongs in the calculation too. If employer coverage ends at 63 and no retiree or spousal coverage is available, the worker needs a bridge to Medicare at 65. For someone born in 1963, required minimum distributions from traditional retirement accounts generally do not begin until 75, leaving years in which the order of withdrawals can matter.
The Paycheck Can Stop Before Social Security Starts
Before turning a strong market into a retirement date, line up the three numbers that decide whether the bridge works.
- Price the years before Social Security. Know how much the taxable portfolio must provide if benefits are delayed.
- Separate investment proceeds from earned income. Portfolio sales generally stay outside the earnings test; wages and net self-employment income do not.
- Model taxes and health coverage at the same time. A sale can be invisible to the earnings test and still change taxable income.
The brokerage account can finance the walk away from work. Social Security does not require the monthly check to start just because the paycheck stopped.
Contact [email protected] for any questions or corrections.
Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
