Retirees with $500,000 in traditional IRAs can gain over $259,200 by deferring Social Security benefits until age 70.
Retirees with $500,000 in a traditional IRA who delay Social Security benefits until age 70 can accumulate approximately $259,200 more over 20 years compared to claiming at 62. The strategy leverages tax-efficient IRA withdrawals to fill lower tax brackets before required minimum distributions begin at 73.
Claiming Social Security at 62 reduces monthly benefits by up to 30%, while waiting until 70 increases payments to $2,480 from $1,400 on a $2,000 base benefit. The benefit formula adjusts by 8% annually after full retirement age, capping at a 24% increase for those with a full retirement age of 67.
The sequencing decision—whether to draw from IRAs first or claim Social Security early—significantly impacts long-term portfolio sustainability for retirees in their early 60s.