I’m turning 65 and still working – should I start taking my pension now or wait?

It’s certainly tempting to start drawing down from Social Security or one’s pension once they surpass the age of 65 — considered by many to be a “traditional” age to enter retirement. Of course, there are plenty of people in their mid-to-late 60s who are still more than happy to stay at work for a fatter nest egg and all of the nice social aspects that stand to be lost when one departs work for good.

In any case, the mileage is going to vary for 65-year-olds who are on the fence about whether they should start tapping into passive income sources or put them on hold for a more generous cash flow stream that’ll trickle in later on. In this piece, we’ll look at a very specific case involving a Reddit user who does not “need” the extra cash that their previous work’s pension can provide. Also, the longer they put off collecting, the larger the monthly sum will be.

Pension benefits: Take it or wait?

The easy answer for this individual is to just put off collecting pension benefits. Of course, any unused cash could be invested to score a better return than what would have been generated by delaying the receipt of pension benefits. However, we’re in a market environment where milder returns should be expected moving forward. The last two years of gains in excess of 20% are probably over with.

The stock market is limping higher after suffering a 10% correction, and it may not be a V-shaped recovery unless Trump reverses course with tariffs before they have a chance to weigh the economy down by enough to fall into a recession. Of course, future returns are highly unpredictable.

Who knows? The stock market may shrug off this very normal correction and finish the year up by another 20%. In any case, investors will need to be comfortable with taking on heightened risks, given tariff threats and a slew of other macro uncertainties that could make the rest of the year a turbulent ride.

The longer you wait, the bigger the monthly payments will be

In any case, I’m a firm believer that it’s better to go for the decent (but perhaps not incredible), risk-free return over the high-risk/high-reward type of investment. As such, if one doesn’t have any extra cash today, perhaps because they’re still making money at their work, it makes the most sense, at least in my view, to put off taking money from one’s pension.

Of course, we don’t know what percentage more the Reddit user will receive every year they put off receiving monthly payments. Given that many pension plans score high single-digit annual returns (let’s say 6-9%), I’d be inclined to say taking the “guaranteed” return is the better move, especially in today’s choppier market environment that may be less hospitable to the recently retired and those seeking to withdraw 4% from their retirement portfolios every single year.

Also, let’s not forget about taxation. Since the Reddit user is still “working,” they’ll probably see their pension payments taxed at a higher rate, given they’ll be in a higher income bracket than if they were retired. Given this, the case for not tapping into the pension is even stronger.

The bottom line

Workplace pensions seem to be a relic of the past, with many employers no longer offering the benefit that was so common for Baby Boomers during their earlier working years. For those fortunate enough to have a pension, like the Reddit user mentioned in this piece, it should be about a matter of need.

If one doesn’t need the cash, putting off receiving benefits can be a wise choice. Of course, other aspects such as life expectancy and long-term priorities should also be considered before making a move. In today’s wobblier market, I’d say treading cautiously isn’t all too bad an idea, even if it means missing out on an explosive rally that could follow the recent correction in stocks.

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