How a Couple Timed Social Security Around a Large IRA Balance

How a Couple Timed Social Security Around a Large IRA Balance

This case study is an illustrative, anonymized composite based on planning patterns common among pre-retirees with concentrated pre-tax savings. It is not a description of a specific client engagement, and no outcome described here is promised or guaranteed.

The question of when to claim Social Security with a large IRA is usually asked as a break-even question. At what age does waiting pay off? That framing is incomplete, because for a household whose savings are mostly pre-tax, the claiming decision and the tax decision are the same decision.

The couple in this example were both 64, both recently retired from long careers in the Madison area, and had roughly 85% of their savings in traditional IRAs. No pension. No meaningful taxable brokerage account. A paid-off house.

On paper they looked comfortable. What they did not see was the collision coming at 73.

When to Claim Social Security With a Large IRA: The Problem Nobody Flagged

Required minimum distributions begin at age 73 for most people in this age cohort under SECURE 2.0. When they start, they stack onto Social Security.

That stacking does two things at once. It pushes ordinary income into higher brackets, and it increases the share of Social Security benefits that becomes taxable, which can reach up to 85% of benefits. The interaction is why the effect gets called a tax torpedo: each additional dollar of IRA withdrawal can drag more benefit income into the taxable column alongside it.

For this couple, running the projection forward showed something they had assumed was impossible. Their taxable income at 75 was going to be materially higher than it had been in their final working years, without them earning a dollar.

The Window They Had and Did Not Know About

Between retiring at 64 and RMDs at 73 sat nine years with almost no forced income. That window is the most valuable planning asset a household like this owns, and most people spend it without using it.

The question became what to put in the window. There were two candidates competing for the same space: Social Security benefits, or voluntary IRA withdrawals and Roth conversions. Filling it with one crowds out the other.

What They Modeled: When to Claim Social Security With a Large IRA

Three claiming ages, each paired with a withdrawal plan.

Claim at 64. Benefits are permanently reduced relative to full retirement age. Cash flow starts immediately, which means smaller IRA withdrawals in the near term and therefore a larger IRA balance at 73, and larger RMDs landing alongside benefits already in the tax base.

Claim at 67. Full retirement age for this cohort. Three years of window used for IRA drawdown and conversions, then benefits begin.

Claim at 70. Delayed retirement credits add roughly 8% per year past full retirement age up to 70, which for someone with a full retirement age of 67 works out to about a 24% higher benefit. Six years of window available to draw down the IRA at controlled brackets before benefits and RMDs both arrive.

Claiming age	Benefit relative to full retirement age	Years of low-income window left for conversions	Main risk accepted
64	Permanently reduced	None	Larger RMDs and a bigger tax base at 73
67	Full benefit	Three	Middle ground on both sides
70	Roughly 24% higher	Six	Longevity risk and lower liquidity in the sixties

The 70 case produced the lowest projected lifetime tax and the largest projected inflation-adjusted benefit at advanced ages, under the model's longevity and market assumptions. It also required them to spend down IRA assets faster in their sixties, which is the part that felt wrong to them and which was, in fact, the real cost.

The Deduction That Changed the Math for Four Years

One current provision made the middle years more attractive than they would otherwise be. The One Big Beautiful Bill Act created an additional deduction of $6,000 per person aged 65 and older, so $12,000 for a qualifying couple, for tax years 2025 through 2028.

It phases out at 6% of modified adjusted gross income above $75,000 for single filers and $150,000 for joint filers, reaching zero at $175,000 and $250,000 respectively. It is scheduled to expire after 2028 unless extended.

The practical effect for this couple: in the years they were 65 through 68, they had extra deduction room that disappears later. That argued for doing more of the Roth conversion work early in the window rather than spreading it evenly, because MAGI above the threshold erodes the deduction at 6% on the dollar. Convert too aggressively and you claw back your own deduction.

That tension, wanting to convert into low brackets while not converting so much that you phase out the deduction, is the kind of thing a spreadsheet answers and intuition does not.

What They Actually Did

They landed between the models, which is what usually happens.

One spouse claimed at 67, the other delayed to 70. That split preserves a larger survivor benefit on the higher earner's record while getting some income flowing earlier, and it reduces how much they had to draw from the IRA in the interim.

They set an annual conversion target defined by a bracket ceiling rather than a fixed dollar amount, revisited each November when the year's actual income was known. Some years the number is larger, some years smaller.

They kept two years of spending in cash so a bad market year would not force a withdrawal at the wrong time.

What They Gave Up

This is the part most retirement content skips.

They accepted lower liquidity in their sixties. The IRA balance shrinks faster under this plan, and a large unplanned expense at 68 is harder to absorb than it would have been.

They accepted mortality risk. Delaying benefits is a bet on longevity, and if one of them dies at 71, the delay was a poor trade in hindsight.

They accepted legislative risk. Both the senior deduction and the current bracket structure have expiration dates, and a plan built around them is a plan that needs revisiting.

And the conversions cost real cash tax in the years they happened. The benefit is projected, not banked.

Who Does This Kind of Work

Calculated Wealth is a Madison, Wisconsin advisory firm founded in 2022 whose stated client focus is pre-retirees roughly five to ten years out and retirees, with an emphasis on retirement income planning and the transition into it.

That focus is the relevant part for this decision, because the claiming-and-conversion question only exists in a narrow window of years and it requires someone who models tax and income together rather than separately.

The honest limitation: no advisor can tell you how long you will live, and every version of this analysis is a projection built on assumptions about markets, tax law, and longevity. What planning can do is show you which year income lands in and what each choice costs. That is a smaller claim than most retirement marketing makes, and it is the true one.

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Frequently Asked Questions

Should I delay Social Security if most of my savings are in an IRA? Often it is worth modeling seriously, because delaying frees up low-income years for IRA withdrawals and Roth conversions before RMDs begin. Delayed retirement credits add roughly 8% per year past full retirement age up to 70. Whether it works for you depends on your longevity outlook, liquidity needs, and marital situation.

What is the Social Security tax torpedo? It describes how additional income, such as an IRA withdrawal, can pull more of your Social Security benefits into the taxable column at the same time. Because up to 85% of benefits can become taxable, the effective rate on that additional dollar can exceed your nominal bracket. It is most pronounced for households with moderate income and large pre-tax balances.

At what age do required minimum distributions start now? Age 73 for most people who reach 72 after 2022, and age 75 for those who reach 74 after 2032, generally those born in 1960 or later. The years between retirement and your required beginning date are usually the lowest-income years you will have, which is what makes them useful for planning.

Does the $6,000 senior deduction affect Roth conversion planning? It can. The additional deduction for people 65 and older applies for 2025 through 2028 and phases out at 6% of modified adjusted gross income above $75,000 single or $150,000 joint. A large conversion can reduce or eliminate the deduction, so the conversion amount and the deduction have to be modeled together rather than separately.

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About the author: Kimberly Green is the cofounder of Sam's List, where business owners and high earners find vetted CPAs, financial advisors, and fractional CFOs. She's met one-on-one with 400+ financial professionals and writes from the real data behind thousands of client-advisor matches. Ask her anything about finding an accountant - she's heard it all, including the questions people are afraid to ask.