Waiting until 70 to claim Social Security raises a retiree’s monthly check by roughly 8% for every year past full retirement age, but it also means a bigger benefit arrives at the same time required minimum distributions from a traditional IRA begin forcing out taxable withdrawals. A retiree who instead draws down IRA savings early, in the years between retirement and age 73, while deliberately delaying Social Security, can shrink the account that eventually triggers those forced withdrawals and settle into a lower tax bracket for years to come. The sequence, not just the amount saved, is what ends up determining how much of a retirement gets taxed.
How Required Minimum Distributions Compound on Top of a Larger Check
Traditional IRAs and similar tax-deferred accounts are subject to required minimum distributions once the owner reaches age 73, and those withdrawals count as ordinary taxable income regardless of whether the money is actually needed that year. A retiree who lets the account grow untouched through their sixties, then starts Social Security at the same age RMDs begin, ends up stacking two separate income streams, a full, undiscounted Social Security check and a forced IRA withdrawal, into the same tax year.
The IRS calculates the required amount each year by dividing the account balance as of the end of the prior year by a distribution period from its Uniform Lifetime Table, meaning the withdrawal grows automatically as the account balance grows, with no discretion left to the owner about timing or size once the rule applies. Skipping or shorting an RMD carries a separate excise tax on the amount not withdrawn, so the distribution is not optional once it starts.
The size of that eventual RMD is locked in years in advance by how large the account is allowed to grow. A traditional IRA that compounds untouched from age 62 to 73 produces a materially larger required withdrawal at 73 than the same account would if the owner had already drawn it down in the interim, simply because RMDs are calculated as a percentage of whatever balance remains.
Free retirement updates: Enrollment and claim windows come and go, and missing one can cost you real money. The free Retirement Shield newsletter keeps you ahead of the deadlines that matter. Sign up free.
Why Drawing Down an IRA Before 73 Can Shrink Future RMDs
A retiree who spends several years living partly on withdrawals from a traditional IRA, rather than Social Security, before required distributions begin is deliberately shrinking the balance the IRS will later use to calculate the RMD. Every dollar withdrawn and spent, or converted to a Roth account, during those years is a dollar that will not still be sitting in the traditional IRA compounding toward an eventual mandatory withdrawal.
Delaying Social Security during that same stretch means the retiree’s only taxable income in those years is whatever they choose to withdraw from the IRA, often at a lower marginal tax rate than they will face once Social Security starts and RMDs begin layering on top of it. Filling up the lower tax brackets deliberately in the years before both income sources arrive is the mechanism that produces real, lasting savings rather than a one-time trick.
The eventual Social Security benefit is not smaller for having waited; it grows for each year of delay up to age 70. What changes is the order of operations: income that would otherwise have arrived all at once, in the retiree’s seventies, at the highest combined tax rate of their retirement, instead gets spread across earlier years while the account owner has more control over their own tax bracket.
The Frozen-Threshold Formula That Decides How Much Social Security Is Taxed
Whether Social Security itself gets taxed depends on a separate calculation, provisional income, equal to a retiree’s other income plus half of their Social Security benefit. Congress set the thresholds that trigger taxation, $25,000 for a single filer and $32,000 for a married couple filing jointly for the first tier, and $34,000 and $44,000 for the second tier, back in the 1980s and 1990s and has never adjusted them for inflation since.
Because those thresholds are frozen while incomes and RMD balances keep growing, a large IRA withdrawal arriving in the same year as Social Security pushes provisional income higher and can make up to 85% of the benefit taxable, on top of whatever tax the withdrawal itself generates. A retiree who already drew down the IRA in earlier years, before Social Security started, faces a smaller RMD and less other income competing with the benefit on the same tax return.
The strategy does not work for every retiree; someone without other income sources to live on while delaying Social Security cannot simply wait, and a very large IRA balance changes the math on how much drawing it down early actually helps. But for a retiree with the flexibility to choose the order, spending down tax-deferred savings first and letting Social Security grow in the background is one of the few decisions in retirement that changes not the total amount of money coming in over a lifetime, but how much of it the tax code ultimately keeps.
This article was researched and drafted with the assistance of artificial intelligence.
More Financial Reading
