For every year you wait past full retirement age up to age 70, your social security benefit increases by roughly 8% per year through delayed retirement credits. Unlike market returns, this increase is built directly into the system, making it a reliable way to boost guaranteed income later in retirement.
A Hidden Planning Opportunity
Many people retire between ages 62 and 65 but delay claiming Social Security. During those years, their taxable income is often lower than it has been in decades.
That period can create what we often call a Roth conversion window.
By strategically converting funds from a Traditional IRA to a Roth IRA during these lower-tax years, you may be able to reduce the size of future Required Minimum Distributions (RMDs) and improve the long-term tax efficiency of your retirement income.
Social Security and Tax Planning Go Hand in Hand
Social Security isn’t just about income. It can also create valuable tax planning opportunities when coordinated properly with other retirement assets.
For example, if you’ve already reached full retirement age, you may have the option to backdate your Social Security claim by up to six months, which can provide additional flexibility depending on your situation.
Key Takeaway
A thoughtful Social Security claiming strategy isn’t about guessing how long you’ll live. It’s about coordinating income timing, tax planning, and retirement assets to create a more efficient long-term plan.
When those pieces work together, Social Security becomes more than a monthly check, it becomes an important part of a well-structured retirement strategy.
Have a question or want help understanding your options? Contact us today to schedule a complimentary Q&A with one of our team members.
