Advice on Social Security and IRA After Retirement

Taking Benefits Early vs. Delaying Until 70:
- You can start taking Social Security benefits as early as 62, but your benefits will be permanently reduced (by about 25-30%, depending on your Full Retirement Age or FRA).
- If you delay until 70, your monthly benefits increase by 8% annually for every year past your FRA. For example, if your FRA is 67, waiting until 70 would increase your benefits by 24%.
Impact of Working Part-Time or Full-Time:
- If you start collecting Social Security before your FRA (e.g., at 62), there’s an earnings limit. In 2024, if you earn more than $22,320, $1 is deducted from your benefits for every $2 earned over the limit. Once you reach your FRA, there’s no penalty for working, and your benefits are recalculated.
- After FRA or at 70: You can work full-time or part-time without reducing benefits.
How Health Impacts the Decision:
- Your advisor’s suggestion to assess your health history is spot on. If you or your spouse have shorter life expectancies due to health, taking benefits earlier can make sense.
- For those in good health, delaying benefits can provide financial security in later years when you’re less likely to work.
Action Plan:
1. Get an estimate of your Social Security benefits using the SSA calculator.
2. Assess your expected retirement budget and whether early benefits or waiting aligns better with your needs.

Bridging the Income Gap:
- Your advisor is referring to using your IRA or investment accounts to cover expenses between retirement and when you claim Social Security.
- For example, if you retire at 67 but delay SS until 70, your IRA withdrawals or other investments may fund those three years.
Minimizing Taxes:
- Withdrawals from a Traditional IRA are taxed as ordinary income.
- Strategies to reduce taxes include:
- Roth Conversions: If your income is lower in early retirement, consider converting some Traditional IRA funds to a Roth IRA, where withdrawals are tax-free later.
1. Tax-Efficient Withdrawals: Withdraw from taxable accounts first (e.g., brokerage accounts), followed by tax-deferred accounts (IRAs), and Roth IRAs last.
2. Staying in a Lower Tax Bracket: Ensure your withdrawals don’t push you into a higher tax bracket.
Investment Allocations:
- As you approach retirement, shifting to a more conservative allocation (e.g., more bonds, fewer stocks) is common, but you still need growth to outpace inflation.
- A typical guideline might be the “60/40” rule (60% stocks, 40% bonds), but this varies based on your risk tolerance and income needs.

Books:
- “The Simple Path to Wealth” by JL Collins – Great introduction to investing and retirement planning.
- “Retirement Planning Guidebook” by Wade Pfau – A comprehensive resource covering Social Security, taxes, and investments.
Websites:
- Bogleheads.org – A community focused on long-term, low-cost investing.
- Morningstar – Research tools for portfolio management.
- SSA’s Website – For understanding Social Security benefits.
Tools:
- Personal Capital – Tracks net worth and helps analyze portfolio allocation.
- SmartAsset Retirement Calculator – Helps estimate retirement income needs and investment growth.
Financial Literacy Podcasts:
- “Retirement Answer Man” with Roger Whitney.
- “The Money Guy Show” – Practical, beginner-friendly advice.

Build a Retirement Budget:
- Calculate your expected monthly expenses and compare them to anticipated income sources (e.g., Social Security, IRA withdrawals).
Estimate Withdrawals:
- Use the 4% Rule as a starting point: Withdraw 4% of your portfolio in the first year of retirement, adjusting annually for inflation.
Talk to Your Advisor:
- Clarify specific questions about Roth conversions, withdrawal strategies, and portfolio rebalancing.
Consider Hiring a CFP:
- A Certified Financial Planner (CFP) can tailor advice to your specific situation, particularly around tax and withdrawal strategies.

Delaying Social Security until 70 generally maximizes benefits, and you can work part-time without penalty after reaching FRA.
For IRA management, focus on tax efficiency, sustainable withdrawals, and maintaining an appropriate asset allocation.
Use beginner-friendly resources to enhance your knowledge, and consider engaging with a CFP if you need personalized guidance.