Claiming Social Security Early or Late: Which Age Is Right for You?
Deciding when to claim Social Security can impact your lifetime income. Learn how ages 62, 67, and 70 affect benefits and how to maximize retirement income with strategic timing.
Deciding when to claim Social Security is one of the most important retirement decisions because it directly impacts your lifetime income. Claiming early at 62 reduces your benefit, waiting until full retirement age (67) provides your standard benefit, and delaying to age 70 increases your benefit significantly. At Greenbush Financial Group, our analysis shows that the right decision depends on your life expectancy, income needs, tax strategy, and overall retirement plan.
How Social Security Benefits Change by Age
Your benefit amount is based on your Full Retirement Age (FRA), which is typically 67 for those born in 1960 or later.
Benefit Adjustments by Claiming Age
Age 62 → ~30% reduction
Age 67 → 100% of your benefit
Age 70 → ~24% increase from FRA
Example
If your FRA benefit is $2,000 per month:
At Greenbush Financial Group, we emphasize that this is a permanent decision that affects income for life.
Why This Decision Matters So Much
Social Security is one of the only income sources in retirement that is:
Guaranteed for life
Adjusted for inflation
Not impacted by market performance
This makes it a critical foundation for retirement income planning.
When It May Make Sense to Claim at Age 62
Claiming early provides income sooner, but at a reduced level.
Situations Where Age 62 May Make Sense
You need income to retire
Health concerns or shorter life expectancy
You want to preserve investment assets
You are concerned about future policy changes
Trade-Off
Lower monthly income for life.
At Greenbush Financial Group, we typically see this strategy used when income needs outweigh long-term maximization.
When Claiming at Full Retirement Age (67) Makes Sense
Full Retirement Age provides your standard benefit without reductions or credits.
Situations Where Age 67 May Make Sense
You want a balanced approach
You are still working into your mid-to-late 60s
You want to avoid early reduction penalties
You are unsure about delaying further
Key Advantage
No reduction, no delay risk.
When It Makes Sense to Delay Until Age 70
Delaying increases your benefit through delayed retirement credits.
Benefits of Waiting
Higher guaranteed monthly income
Better inflation-adjusted income over time
Increased survivor benefits for a spouse
Situations Where Age 70 May Make Sense
You have longevity in your family
You do not need income immediately
You want to maximize lifetime income
You are concerned about outliving your money
You have significant Tax Deferred Assets to drawdown
At Greenbush Financial Group, delaying to 70 is often one of the most effective ways to increase guaranteed retirement income.
The Break-Even Analysis: When Do You Come Out Ahead?
A common way to evaluate this decision is through a break-even analysis.
General Insight
Break-even age is often around 78–82
If you live beyond this range, delaying may result in higher lifetime income
Important Note
This analysis does not account for:
Taxes
Investment returns
Spousal benefits
Personal spending needs
How Taxes Impact Your Social Security Decision
Your Social Security benefits may be taxable depending on your income.
Key Considerations
Up to 85% of benefits can be taxable
IRA withdrawals can increase taxation
Claiming earlier may reduce taxable income in some scenarios
Planning Strategy
Coordinate Social Security with retirement withdrawals to manage your tax bracket effectively.
Spousal and Survivor Benefit Considerations
Married couples should evaluate this decision together.
Key Rules
Spouse can receive up to 50% of the higher earner’s benefit
Survivor receives the higher of the two benefits
Planning Insight
Delaying benefits for the higher earner can increase survivor income significantly.
At Greenbush Financial Group, spousal coordination is often one of the most impactful strategies.
A Simple Decision Framework
Instead of looking for a one-size-fits-all answer, consider these key questions:
Ask Yourself
Do I need the income now?
What is my health and life expectancy?
Do I have other income sources?
What is my tax situation?
Am I planning for a spouse or survivor benefit?
Common Mistakes to Avoid
Claiming early without a plan
Ignoring spousal benefits
Focusing only on break-even analysis
Not considering taxes
Making the decision in isolation from your full retirement plan
Final Thoughts
There is no universally “correct” age to claim Social Security. The best decision depends on your financial situation, health, and long-term goals.
At Greenbush Financial Group, our analysis shows that integrating Social Security into a broader retirement income and tax strategy leads to better outcomes than focusing on the decision in isolation.
Rob Mangold
About Rob……...
Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.
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Is it better to take Social Security at 62 or 70?It depends on your health, income needs, and life expectancy. Delaying increases lifetime income if you live long enough.
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How much more do you get by waiting until 70?About 8% per year after full retirement age, up to age 70.
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What is the break-even age for Social Security?Typically around age 78 to 82.
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Can I work while collecting Social Security at 62?Yes, but your benefits may be reduced if you exceed income limits before full retirement age.
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What happens if I delay Social Security past 70?There is no additional benefit increase after age 70.
2026 Tax-Efficient Retirement Withdrawals: How to Keep More of Your Money
A tax-efficient retirement withdrawal strategy focuses on minimizing taxes while creating consistent income throughout retirement. The order in which you withdraw from taxable, tax-deferred, and Roth accounts can significantly impact how long your money lasts. At Greenbush Financial Group, our analysis shows that strategic withdrawals can reduce lifetime taxes and increase net retirement income.
A tax-efficient retirement withdrawal strategy focuses on minimizing taxes while creating consistent income throughout retirement. The order in which you withdraw from taxable, tax-deferred, and Roth accounts can significantly impact how long your money lasts. At Greenbush Financial Group, our analysis shows that strategic withdrawals can reduce lifetime taxes and increase net retirement income.
Understanding the Three Types of Retirement Accounts
Before building a withdrawal strategy, it is important to understand how different accounts are taxed.
1. Taxable Accounts (Brokerage Accounts)
Capital gains taxes apply when investments are sold
Long-term capital gains rates are often lower than income tax rates
Dividends may also be taxed annually
2. Tax-Deferred Accounts (Traditional IRA, 401(k))
Withdrawals are taxed as ordinary income
Required Minimum Distributions (RMDs) apply starting in your 70s
3. Tax-Free Accounts (Roth IRA, Roth 401(k))
Qualified withdrawals are tax-free
No RMDs for Roth IRAs
Provides flexibility for tax planning
At Greenbush Financial Group, we view these three “buckets” as the foundation of any tax-efficient withdrawal plan.
The Traditional Withdrawal Order Strategy
A common approach is to withdraw funds in a specific sequence to manage taxes over time.
Standard Withdrawal Order
Taxable accounts first
Tax-deferred accounts second
Roth accounts last
Why This Strategy Works
Allows tax-deferred accounts to continue growing
Delays ordinary income taxes
Preserves Roth accounts for later years or legacy planning
However, this strategy is not always optimal in every situation.
Why a Blended Withdrawal Strategy May Be Better
Strictly following the traditional order can sometimes lead to higher taxes later in retirement.
The Problem
If you delay withdrawals from tax-deferred accounts too long:
RMDs can become large
You may be pushed into higher tax brackets
Social Security may become more taxable
Medicare premiums (IRMAA) may increase
A More Strategic Approach
At Greenbush Financial Group, we often recommend a blended withdrawal strategy:
Withdraw from taxable accounts
Supplement with partial IRA withdrawals
Use Roth accounts strategically when needed
This helps smooth out taxable income over time rather than creating spikes later.
Roth Conversions: A Key Tax Planning Tool
One of the most powerful strategies in retirement is converting pre-tax money into Roth accounts.
How It Works
Move funds from a Traditional IRA to a Roth IRA
Pay taxes now at current rates
Future growth and withdrawals are tax-free
When It Makes Sense
Years with lower income (early retirement before Social Security)
Before RMDs begin
When tax rates are temporarily lower
Example
Convert $50,000 from IRA to Roth
Pay tax today at a lower rate
Reduce future RMDs and taxes
At Greenbush Financial Group, Roth conversion strategies are often a cornerstone of long-term tax planning.
Managing Your Tax Bracket Each Year
Instead of focusing only on which account to withdraw from, it is often more effective to focus on your tax bracket.
Strategy
Fill up lower tax brackets intentionally
Avoid jumping into higher brackets
Coordinate withdrawals with Social Security timing
Example
If the 12% tax bracket ends at a certain income level:
Withdraw just enough from IRA to stay within that bracket
Use Roth or taxable accounts for additional income needs
This approach allows for more control over lifetime taxes.
How Social Security Impacts Your Tax Strategy
Social Security income can change how your withdrawals are taxed.
Key Considerations
Up to 85% of Social Security benefits can be taxable
Additional income from IRA withdrawals can increase taxation
Timing Social Security can impact your tax plan
Planning Insight
Delaying Social Security while using IRA withdrawals or Roth conversions early in retirement can sometimes lead to better long-term outcomes.
Avoiding Common Retirement Tax Mistakes
Many retirees unintentionally increase their tax burden.
Common Mistakes
Waiting too long to withdraw from tax-deferred accounts
Ignoring Roth conversion opportunities
Triggering higher Medicare premiums (IRMAA)
Not coordinating withdrawals with tax brackets
Over-withdrawing in a single year
At Greenbush Financial Group, we often see that small adjustments can lead to significant tax savings over time.
A Simple Example of a Tax-Efficient Withdrawal Plan
Scenario
Age 62, retired
$1,000,000 in savings
$400,000 IRA
$300,000 Roth IRA
$300,000 brokerage
Strategy
Withdraw from brokerage for living expenses
Convert $30,000–$50,000 annually from IRA to Roth
Delay Social Security until later years
Use Roth funds strategically after RMD age
Result
Lower lifetime taxes
Reduced RMD impact
Greater flexibility in retirement
Final Thoughts
A tax-efficient withdrawal strategy is not about following a fixed rule. It is about coordinating income sources, tax brackets, and long-term planning.
At Greenbush Financial Group, our analysis shows that retirees who proactively manage taxes throughout retirement often keep significantly more of their income and reduce the risk of large tax surprises later in life.
Rob Mangold
About Rob……...
Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.
- What is the best order to withdraw retirement funds?Typically taxable accounts first, then tax-deferred, then Roth, but a blended strategy is often more effective.
- Are Roth withdrawals always tax-free?Yes, if the account meets the qualified distribution rules.
- What is a Roth conversion?It is when you move money from a pre-tax account to a Roth account and pay taxes now to avoid taxes later.
- How can I reduce taxes on retirement income?By managing tax brackets, using Roth conversions, and coordinating withdrawals across account types.
- Do Required Minimum Distributions increase taxes?Yes, RMDs are taxable and can push you into higher tax brackets if not planned for
Self-Employment Income In Retirement? Use a Solo(k) Plan To Build Wealth
It’s becoming more common for retirees to take on small self-employment gigs in retirement to generate some additional income and to stay mentally active and engaged. But, it should not be overlooked that this is a tremendous wealth-building opportunity if you know the right strategies. There are many, but in this article, we will focus on the “Solo(k) strategy
It’s becoming more common for retirees to take on small self-employment gigs in retirement to generate some additional income and to stay mentally active and engaged. But, it should not be overlooked that this is a tremendous wealth-building opportunity if you know the right strategies. There are many, but in this article, we will focus on the “Solo(k) strategy.”
What Is A Solo(K)
A Solo(k) plan is an employer-sponsored retirement plan that is only allowed to be sponsored by owner-only entities. It works just like a 401(k) plan through a company but without the high costs or administrative hassles. The owner of the business is allowed to make both employee deferrals and employer contributions to the plan.
Solo(k) Deferral Limits
For 2025, a business owner is allowed to contribute employee deferrals up to a maximum of the LESSER of:
100% of compensation; or
$31,000 (Assuming the business owner is age 50+) or
$34,750 (For individuals age 60-63)
Pre-tax vs. Roth Deferrals
Like a regular 401(K) plan, the business owner can contribute those employee deferrals as all pre-tax, all Roth, or some combination of the two. Herein lies the ample wealth-building opportunity. Roth assets can be an effective wealth accumulation tool. Like Roth IRA contributions, Roth Solo(k) Employee Deferrals accumulate tax deferred, and you pay NO TAX on the earnings when you withdraw them as long as the account owner is over 59½ and the Roth account has been in place for more than five years.
Also, unlike Roth IRA contributions, there are no income limitations for making Roth Solo(k) Employee Deferrals and the contribution limits are higher. If a business owner has at least $31,000 in compensation (net profit) from the business, they could contribute the entire $31,000 all Roth to the Solo(K) plan. A Roth IRA would have limited them to the max contribution of $8,000 and they would have been excluded from making that contribution if their income was above the 2025 threshold.
A quick note, you don’t necessarily need $31,000 in net income for this strategy to work; even if you have $18,000 in net income, you can make an $18,000 Roth contribution to your Solo(K) plan for that year. The gem to this strategy is that you are beginning to build this war chest of Roth dollars, which has the following tax advantages down the road……
Tax-Free Accumulation and Withdrawal: If you can contribute $100,000 to your Roth Solo(k) employee deferral source by the time you are 70, if you achieve a 6% rate of return at 80, you have $189,000 in that account, and the $89,000 in earnings are all tax-free upon withdrawal.
No RMDs: You can roll over your Roth Solo(K) deferrals into a Roth IRA, and the beautiful thing about Roth IRAs are no required minimum distributions (RMD) at age 73 or 75. Pre-tax retirement accounts like Traditional IRAs and 401(k) accounts require you to begin taking RMDs at age 73 or 75 based on your date of birth, which are forced taxable events; by having more money in a Roth IRA, those assets continue to build.
Tax-Free To Beneficiaries: When you pass assets on to your beneficiaries, the most beneficial assets to inherit are often a Roth IRA or Roth Solo(k) account. When they changed the rules for non-spouse beneficiaries, they must deplete IRAs and retirement accounts within ten years. With pre-tax retirement accounts, this becomes problematic because they have to realize taxable income on those potentially more significant distributions. With Roth assets, not only is there no tax on the distributions, but the beneficiary can allow that Roth account to grow for another ten years after you pass and withdraw all the earnings tax and penalty-free.
Why Not Make Pre-Tax Deferrals?
It's common for these self-employed retirees to have never made a Roth contribution to retirement accounts, mainly because, during their working years, they were in high tax brackets, which warranted pre-tax contributions to lower their liability. But now that they are retired and potentially showing less income, they may already be in a lower tax bracket, so making pre-tax contributions, only to pay tax on both the contributions and the earnings later, may be less advantageous. For the reasons I mentioned above, it may be worth foregoing the tax deduction associated with pre-tax contributions and selecting the long-term benefits associated with the Roth contributions within the Solo(k) Plan.
Now there are situations where one spouse retires and has a small amount of self-employment income while the other spouse is still employed. In those situations, if they file a joint tax return, their overall income limit may still be high, which could warrant making pre-tax contributions to the Solo(k) plan instead of Roth contributions. The beauty of these Solo(k) plans is that it’s entirely up to the business owner what source they want to contribute to from year to year. For example, this year, they could contribute 100% pre-tax, and then the following year, they could contribute 100% Roth.
Solo(k) versus SEP IRA
Because this question comes up frequently, let's do a quick walkthrough of the difference between a Solo(k) and a SEP IRA. A SEP IRA is also a popular type of retirement plan for self-employed individuals; however, SEP IRAs do not allow Roth contributions, and SEP IRAs limit contributions to 20% of the business owner’s net earned income. Solo(K) plans have a Roth contribution source, and the contributions are broken into two components, an employee deferral and an employer profit sharing.
As we looked at earlier, the employee deferral portion can be 100% of compensation up to the Solo(K) deferral limit of the year, but in addition to that amount, the business owner can also contribute 20% of their net earned income in the form of a profit sharing contribution.
When comparing the two, in most cases, the Solo(K) plan allows business owners to make larger contributions in a given year and opens up the Roth source.
About Michael……...
Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.
Frequently Asked Questions (FAQs):
What is a Solo(k) plan?
A Solo(k) is a 401(k)-style retirement plan designed for self-employed individuals or business owners with no employees other than a spouse. It allows both employee and employer contributions, offering high contribution limits and flexible tax options.
How much can you contribute to a Solo(k) in 2025?
For 2025, you can contribute the lesser of 100% of your compensation or up to:
$31,000 if age 50 or older
$34,750 if age 60–63
These limits include employee deferrals and do not count potential employer profit-sharing contributions.
Can Solo(k) contributions be Roth or pre-tax?
Yes. You can choose to make contributions as pre-tax, Roth, or a combination of both. Roth contributions are made with after-tax dollars but grow tax-free, and qualified withdrawals are also tax-free.
Why might Roth Solo(k) contributions be advantageous for retirees?
Roth Solo(k) assets grow tax-free, have no required minimum distributions (RMDs) once rolled into a Roth IRA, and can be passed to beneficiaries without income tax. For retirees in lower tax brackets, contributing to Roth accounts may provide long-term tax benefits over pre-tax deferrals.
Can you make Roth contributions to a SEP IRA?
No. SEP IRAs only allow pre-tax contributions and do not offer a Roth option. This makes the Solo(k) plan a more flexible choice for self-employed individuals looking to build tax-free retirement income.
How does a Solo(k) compare to a SEP IRA?
A Solo(k) allows both employee deferrals (up to 100% of income) and employer profit-sharing contributions, plus the option for Roth contributions. A SEP IRA limits contributions to 20% of net earned income and only allows pre-tax contributions, typically resulting in lower total contribution potential.
Is a Solo(k) a good option for retirees with part-time income?
Yes. For retirees earning even modest self-employment income, a Solo(k) can be a powerful tool to continue saving for retirement—especially with Roth contributions that provide future tax-free income and estate planning advantages.
