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.

The S&P 500 has experienced a substantial rally, gaining nearly 38% to 40% over a two-year period and establishing fresh all-time records in 2026. This prolonged market strength coincides with a declining labor-force participation rate among Americans aged 55 and older, which reached 36.9% in July, encouraging more prospective retirees to consider early retirement. Financial analysis highlights how retirees can leverage strong equity portfolios as a bridge to delay claiming Social Security benefits. Selling equities or other personal investments to fund living expenses does not trigger the Social Security retirement earnings test, which strictly evaluates wage earnings and net self-employment income rather than capital gains, dividends, or interest. Under current rules, Social Security withholds $1 for every $2 earned above $24,480 prior to reaching full retirement age. Claiming Social Security early at age 63 results in a permanent benefit reduction to 75% of full retirement age amounts. While investment sales avoid earnings test penalties, capital gains can make up to 85% of Social Security benefits taxable, requiring careful tax and withdrawal planning.