A $1.4 million nest egg using the 4% rule generates $56,000 annually, leaving a $14,200 gap until Social Security begins at 67.
Retiring at 62 with $1.4 million may create a $14,200 annual income shortfall before Social Security payments start at 67. The 4% withdrawal rule yields $56,000 annually, below the $70,200 target for many retirees.
The gap stems from the five-year delay between retirement and full Social Security eligibility. Claiming benefits at 62 reduces payments by 30%, a permanent cut that outweighs short-term liquidity needs. Financial planners often overlook this interim period in retirement projections.
Strategies like Treasury ladders or Roth conversions during low-income years can mitigate the shortfall. Moving $75,000 to $90,000 into such instruments may preserve portfolio longevity and tax efficiency.