Should You Delay Social Security and Spend Down Your IRA?
One of the biggest retirement questions Americans face is this: Should you claim Social Security early, or delay benefits and spend from your IRA first?
For many retirees, the answer feels emotional as much as mathematical. Watching retirement savings decrease can feel uncomfortable, even if delaying Social Security could improve long-term financial security.
That’s exactly why this topic creates so much debate.
In this discussion, we’ll walk through a real-world retirement planning scenario and explain why delaying Social Security may make sense for some retirees — especially those trying to create more reliable lifetime income.
The key takeaway? Retirement income planning isn’t about opinions. It’s about running the numbers and understanding how different claiming strategies affect long-term financial outcomes.
Why Social Security Timing Matters
When you claim Social Security affects your monthly benefit for the rest of your life.
Claim early, and your monthly payment is permanently reduced. Delay benefits, and your monthly payment increases substantially.
Many retirees automatically assume taking Social Security as early as possible is best because they want to preserve retirement accounts like IRAs or 401(k)s.
But in some cases, the opposite approach may actually improve retirement sustainability.
That means:
- Using IRA withdrawals earlier in retirement
- Delaying Social Security until age 70
- Creating a larger guaranteed income stream later in life
This strategy can feel counterintuitive because your IRA balance may decline faster in the early retirement years. However, the long-term math can produce significantly different results.
A Real Retirement Scenario
Let’s look at a simplified example used in retirement planning software.
Assume the retiree:
- Is age 65
- Is fully retired
- Has $300,000 in an IRA
- Has no pension income
- Needs $3,500 per month to live
- Would receive $2,600 monthly from Social Security at full retirement age
- Earns approximately 4% annual return on investments
- Is single
- Plans for average life expectancy
This is not an extreme example. In fact, it reflects a common retirement situation many Americans face today.
Scenario One: Taking Social Security Early
In the first strategy, the retiree claims Social Security immediately.
At first glance, this feels safer emotionally because the retiree begins receiving income right away and avoids drawing heavily from retirement accounts.
But there’s a problem.
The retiree still needs more monthly income than Social Security provides.
Even after claiming benefits, there remains a consistent income shortfall that must be covered by IRA withdrawals.
As inflation increases expenses over time, the shortfall continues growing.
Initially, the IRA balance may not appear to decline dramatically because investment growth partially offsets withdrawals. But eventually, withdrawals begin outpacing investment returns.
Over time, the retirement account steadily erodes.
In this example, the IRA eventually reaches zero around the early 80s.
That creates a serious retirement risk:
- No remaining investment assets
- A permanently reduced Social Security benefit
- Increasing expenses due to inflation
- Less flexibility later in life
This is one of the biggest fears retirees face — running out of money while still living independently.
Why Longevity Changes Everything
One reason Social Security claiming decisions are so important is because people are living longer.
Many retirees underestimate how long retirement may last.
Planning to age 90 is becoming increasingly realistic.
If someone retires at 65 and lives until 90, retirement lasts 25 years.
That means retirement income planning isn’t simply about maximizing income today. It’s about creating sustainable income for decades.
That’s where delayed Social Security strategies often become powerful.
Scenario Two: Delaying Social Security Until Age 70
Now let’s look at the alternative strategy.
Instead of claiming Social Security immediately, the retiree delays benefits until age 70 and uses IRA withdrawals to cover living expenses in the meantime.
Emotionally, this can feel painful.
During the first five years of retirement, the IRA balance declines much faster because there is little or no Social Security income coming in.
The account balance may drop from:
- $300,000
- To $260,000
- To $220,000
- To $177,000
- Eventually near $80,000 before Social Security begins
That decline can create anxiety for retirees who are used to watching account balances grow during working years.
But once delayed Social Security begins, something important happens.
The Power of Higher Guaranteed Income
By delaying benefits, the retiree locks in a substantially larger Social Security payment for life.
That higher guaranteed income dramatically reduces future withdrawal pressure on the IRA.
Instead of constantly draining retirement assets later in life, the retiree now has:
- Higher guaranteed monthly income
- Better inflation-adjusted income
- Reduced dependency on portfolio withdrawals
- Lower risk of completely exhausting savings
In this scenario, the retiree still has remaining IRA assets much later into retirement.
The difference is striking.
At age 80, the comparison may look something like this:
- Early Social Security strategy: Lower Social Security income and zero IRA assets remaining
- Delayed Social Security strategy: Higher Social Security income and remaining IRA assets still available
This illustrates why retirement planning isn’t only about preserving investment balances today. It’s also about protecting future income needs.
Why Many Retirees Struggle With This Strategy
Even when the math supports delaying Social Security, many retirees still struggle emotionally with the decision.
Why?
Because people naturally dislike seeing savings accounts decline.
Watching an IRA balance fall from $300,000 toward $100,000 can feel frightening — even if the strategy improves long-term retirement sustainability.
Meanwhile, taking Social Security early may feel psychologically safer because account balances remain higher initially.
But retirement planning should focus on total lifetime outcomes, not just short-term comfort.
Social Security Is More Than a Break-Even Calculation
Many online discussions focus only on “break-even age.”
The idea is simple:
At what age would delayed benefits finally surpass the total amount collected from claiming early?
While break-even analysis can be useful, it misses a much larger point.
Social Security is not simply an investment calculation.
It is guaranteed lifetime income.
For retirees without large pensions, Social Security often becomes the foundation of retirement security.
That means increasing guaranteed income later in life can significantly reduce financial stress during older retirement years.
What About Investment Returns?
Some people argue they could claim Social Security early and invest the money instead.
Others assume they can reliably earn high returns indefinitely.
But retirement planning requires realism.
Markets fluctuate.
Interest rates change.
Guaranteed returns are limited.
And retirees withdrawing money during market downturns face sequence-of-returns risk, which can accelerate portfolio depletion.
This is why relying solely on investment performance can become dangerous, especially for retirees with modest savings.
Higher guaranteed income may provide more long-term stability than hoping investments consistently outperform.
Every Retirement Situation Is Different
Of course, no Social Security strategy works for everyone.
Important factors include:
- Life expectancy
- Marital status
- Pension income
- Health conditions
- Home equity
- Taxes
- Investment risk tolerance
- Retirement spending needs
For example, someone with significant retirement assets may have far more flexibility.
Likewise, someone with health concerns or shortened life expectancy could reasonably choose earlier benefits.
This is why personalized retirement planning matters so much.
Why Running the Numbers Matters
Retirement planning software can model thousands of calculations and test different scenarios.
Instead of relying on opinions from friends, relatives, or online comments, retirees should evaluate how different claiming strategies impact:
- Portfolio longevity
- Lifetime income
- Tax efficiency
- Inflation protection
- Withdrawal sustainability
- Survivor benefits
What works for one retiree may not work for another.
That’s why Social Security claiming decisions should never be made in isolation.
The Bottom Line
For some retirees, spending down IRA assets earlier in retirement to delay Social Security may actually improve long-term retirement security.
While emotionally difficult, the strategy can create:
- Higher guaranteed lifetime income
- Better inflation-adjusted cash flow
- Reduced risk of running out of money later in life
- More retirement stability during older years
The key is understanding your personal numbers and evaluating multiple retirement income strategies before making a permanent Social Security decision.
Because once benefits begin, the choice can affect the rest of your retirement.
Frequently Asked Questions About Delaying Social Security
Is delaying Social Security always the best option?
No. The right strategy depends on health, life expectancy, retirement savings, income needs, marital status, taxes, and other personal financial factors.
Why would someone spend IRA money before taking Social Security?
The goal is often to increase guaranteed lifetime income later in retirement by allowing Social Security benefits to grow through delayed retirement credits.
What age gives the highest Social Security benefit?
For most retirees, waiting until age 70 produces the maximum monthly Social Security benefit.
What happens if I take Social Security early?
Your monthly benefit is permanently reduced compared to waiting until full retirement age or age 70.
Can delaying Social Security reduce the risk of running out of money?
In some scenarios, yes. Higher guaranteed income later in retirement may reduce pressure on investment accounts and improve retirement sustainability.
How do I know which Social Security strategy is right for me?
A personalized retirement income analysis can help evaluate claiming strategies based on your specific financial situation and retirement goals.
Daniel Wendol
Item #1
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should you delay Social Security and raid your IRA part two last week Tony and I did a show on how the math works when it comes to claiming Social Security early versus delaying and I did a very specific scenario yet there was still questions phone calls comments on the YouTube channel and on the podcast that require me to revisit this and go in more detail even more detail let me bring in my code co-host Tony you remember what we talked about last week how you know makes sense to delay Social Security and completely destroy your
00:00:38
irra yeah um but the big thing was watching your IRA account go down while you’re waiting it’s very difficult for people and the comments of the video prove that so let’s revisit and if you’re just tuning in for the first time let me revisit this scenario that we’re going to get deep into what I’m going to do Tony for the viewers I’m going to share my screen and show my financial planning software yeah but for our podcast listeners out there don’t worry you’re not missing much usually Dan
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accidentally shows pictures of his family vacation with him on the beach in a speedo so you don’t want that for our listeners who can’t see the video you’re not missing anything no okay I’m kidding you got comments though last week I mean when you talk about these things I love the fact that it generates a lot of people have a lot of opinions on Social Security and these strategies it’s always Funny how whenever you talk about this and say hey here’s a strategy people are like oh my goodness I I filed
00:01:41
at 62 you have to do what I did right that’s it there’s always people like I always say people watch the video and they are looking for someone to validate their strategy right um and when they hear someone say something that’s completely opposite of what they’re doing they take offense or they feel like they should defend and attack sure uh my strategy but I think it’s human nature to want to be validated and and uh I I don’t fault them for that but I I do think they have to understand if
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they’re an individual who hasn’t worked as a financial professional their whole lives and don’t have software that runs 20,000 calculations and consider everybody’s different right well once you get into it life happens and and even if the math says one thing a lot of times we do something different just based on the situation y life happens again though we have to be specific on this situation because otherwise it just you’re going to be all over the map and that’s what
00:02:39
my past shows were here are the things to consider but let’s talk specifically about this scenario and let me show you on the software exactly what I mean by um what I said in the last show so age 65 and retiring so they’re not going back to work and they have $300,000 saved in an IRA that’s it they have that’s all the money they have and they have no other income and they’re making the decision do I turn Social Security on now or do I delay for the future now they take the 300,000 in the IRA and
00:03:10
they invest it and they’re getting 3.89% that’s what I’m showing in my scenario why that number well because again can you get more than that right now late 2024 yes but for how long and you’re going to be investing this you’re going to be spending it it’s going to be tricky so just keep things real and safe I’m saying about a 4% return they need $3,500 a month to live so all they got is Social Security and their Ira they need 3500 a month to live again you might be saying I need more than that I
00:03:45
need that’s not the point and their social security Pia primary Insurance amount meaning what they would get at their full retirement age of age 67 is $2600 so right off the bat you look and say they’re going to get $2,600 if they take at 67 they’re 65 and they need 3500 we got a problem Houston right we’re already $900 short a month right even if they waited until their full retirement age we’re going to also assume they’re living their average life expectancy and that they’re single so there’s no other
00:04:17
drama associated with having a spouse to worry about and we’re not going to be dying early so that changes the math as well all right so in this scenario drawing down the their IRA early and delaying Social Security makes more sense than uh I mean makes less sense than all drawing down your IRA early to delay Social Security makes more sense than taking social security immediately and I want to show you why that’s the case so I’m going to share my U software it’s it’s called Uh right Capital um I’m
00:04:58
not promoting I don’t get paid to do this this is one of the software companies that I use when I’m doing financial planning so you could see my screen toning for those of you are listening um I’m sorry but you can I’ll try and say it out loud so you see the probability of success is 3% in this scenario but again I’ll get to what that means in a moment so again scenario is there’s 64 they’re going to be 65 they’re taking uh in January they’re taking they need 35 100 a month and
00:05:31
they’re taking social security as early as possible meaning they’re taking it now right so what does that mean cash flow wise I’m going to skip over to a cash flow statement this means that if they take it now they’re going to get about $26,000 a year from Social Security and that goes up for the rest of their life with the social social security cost of living which is included in here so their income is set they’ve locked in their rate and they got that income for life all the way to however long they
00:06:00
live say 90 their expenses are 42,000 a year that’s what we said their expenses are and those go up every year for the rest of their life because life rightl inflation yeah so they’re immediately 178 $19,000 short between what they need to live and what Social Security is going to provide them sure and that doesn’t go away they’re always going to be short because their expenses are going to go up with cost of live and their social security is going to go up with cost of living so they’re always
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going to be running a deficit for the rest of their lives because they taken Social Security early now how are they going to pull that off and that deficit is going to go up that deficit is going to continue to rise mon need goes up it depends on the monthly need right and and we’re not even to talk about emergencies or any sort of expenses beyond their living right so how are they going to pull this off well they have that 300,000 remember yeah they’re going to P Ira after a year their 300,000 is now
00:07:00
289 290 then it goes to 279 then to 267 in year three 254 so it goes down but not dramatically right because What’s Happening Here is they have a deficit they’re making interest on their money the 300,000 so that’s helping but even with the interest of say 4% they’re still needing to take away from their Ira eventually the government’s going to force them to take money out of their Ira when they hit 73 but at this point they’re taking from their Ira to live and it’s drawing down
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their IRA and it keeps going down and eventually they’re going to get to the point in their mid-70s where the draw down is way more than the growth and it’s going to go down to Zero by the time they hit 81 you see that yeah so it looks nice in the beginning because you still got 280 290 260 250 but where’s the panic button hit at what point do they say oh no when they go below 200,000 when they hit 71 right I don’t know what their panic button is but I do know that their lifestyle is not sustainable because if
00:08:17
we go back to cash flows and we look at their deficit you know at age 81 um their total inflows or 82 say their total inflows are 30 8,000 from Social Security that’s it their expenses are still 64 they’re short 25,000 they have nowhere to pull from what do they do what do they do at that point when you when you are spending 25,000 more than you’re making and you have no money to pull from in your IRA what do you do Tony yeah call Tony I call Dan but for a visual for a visual for people that are looking at
00:08:56
all right what does that look like here’s the chart MH goes straight down not straight down but it goes gradually down until you hit around 80 and then you’re out of money on average yeah you a little bit and hope I mean yeah and the problem is is you know if you knew uh hey I’m single I’m I’m definitely going to pass at 75 then taking it early is probably the best possible scenario but you don’t know how long you’re going to live unless you have a terminal illness and
00:09:31
even then some people defy the odds I mean and my grandfather lived to 101 my dad is 81 and he’s still going I mean he has cognitive problems but I mean physically he’s going to be around and nowadays people live longer and longer so yeah I think you have to plan till you’re at least 90 and in order to plan until you’re 90 the whole I’m just going to take it when I’m 62 now some people are saying well you’re using numbers that aren’t my numbers well what about that Dan but again I like I said you
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have to you have you know you have to go with the scenario and this is what I was trying to show and it is a dramatic scenario there’s no other factors in here but I’m trying to simplify it to show the point where hey look at this in all scenarios basically there’s a really really strong chance you’re gonna be out of money in your early 80s and um that’s not a good thing people fear running out of money and I’m not trying to play fear Monga here I’m saying this is a scenario
00:10:32
300,000 can easily go and it’s not like you’re spending a ton of money what are you starting out $46,000 spend a year that’s not a lot no now let’s change the scenario to the optimal strategy which just so happens in this case to be taking it at 70 what does that do well to the visual you’ll see again now we’re going down much quicker early but then you see we level off and we don’t run out let me go back to cash flow to talk real numbers for those that are listening in the
00:11:02
beginning now so same scenario you take the 300,000 investing it at around 4% and you don’t touch Social Security until age 70 what does that do to your cash flow what is your income zero you have no income in those first five years where you going to get the money from your IRA so what happens well that first year you’re down 45,000 50,000 50,000 50 and you keep doing that until you turn Social Security on and then eventually you turn Social Security on and you’re making 45 46,000 a year in Social
00:11:34
Security your expenses are the same in both scenarios but here the difference is not as much you’re only short about a th500 later in life at age 80 your income is 56 57,000 from Social Security whereas your expenses are only 60 so you’re short $1300 or so um you know you’re short not that much so it’s painful in that beginning part but let’s look at what happens to the actual Ira we started with 300,000 now we’re down to 260 then the 220 then the 177 did you panic yet Tony we’re down to
00:12:13
131 we’re down to 82 at 82 I start to panic you start to panic your 300,000 is now worth 82,000 and you’re turning Social Security on next year you turn on Social Security and then you start to see your $77,000 bounds level off it goes down slightly but only by a th only by a th000 or so 2,000 maybe and yeah that’s not great you’re not sit you know at age 80 you’re sitting at 55,000 in the bank and the IRA but remember what’s different now in these two scenarios your Social Security
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is much higher yes and every year that cost of living is on a higher amount so the calculations a lot of people don’t consider that right having a larger Baseline income from Social Security gives more breathing room to your retirement savings later if you can accept that initial drop that’s what I said in the last show and I’m still saying it now in this scenario see delaying Social Security leads to a lower chance of running out of money completely and it’s coupled with that higher Baseline income I’ll
00:13:24
give you the the um the scenarios Tony um let me let me give you the first one here I wrote it down all right age 70 all right would you rather Tony at age 70 have 45,000 of income guaranteed from Social Security a year and have 77,000 in your IRA or so 45,000 a year in income with 77,000 in Ira or Instead at age 70 you have 226,000 in your IRA but you only have 29,000 of guaranteed income from Social Security so there’s a $166,000 difference that I talked about guaranteed income but you have 226,000 versus 77,000 yeah a lot of
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people are going to say I want that money in the bank but I personally because I know from talking to you and other Financial professionals and from life from seeing my parents and seeing what happens when they hit their seven 7s and 880s I want guaranteed income uh later in life in the beginning you’re feeling the pain you watched that chart go down real quick yeah you watched your account go from 300 to 80,000 in five years that’s hard for people yeah it’s a lot harder than seeing it go from 300 to 290 to 275
00:14:51
right in that same amount of time but I want mailbox money you do you do when when it’s this tight when you’re in a scenario where you know what’s the difference between having an extra 100,000 in the bank if you’re going to be short 16,000 a year you could easily do the math and be like man that’s only gonna last me six years seven years yeah right and so when you’re out of money wouldn’t you rather have a higher Baseline so let’s fast forward would you rather Tony at age
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80 have if you delay 57,000 of income from Social Security at age 80 with 55,000 in assets or 39,000 of income with zero assets yeah exactly now we’re at now we fast forwarded 10 years and people at 65 might say I don’t even know if I’ll be around at 80 at 80 I’m not going to want to do anything I’m not going to need a lot of income can’t you can’t you got to plan until 90 nowadays so many more people are living longer and if you have assets if you have a million dollars it changes
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everything right it’s this is for the $300,000 savings person yeah and and which is a lot of people which is more people than have a million saved for retirement that’s for sure we know that when you’re doing the math you look at break even and I could do better it’s always people that are saying that have a lot more money and for those people we have a different conversation but for the average Joe out there listening that’s single like this makes sense and when you look at it this way yeah
00:16:24
$55,000 of assets is not a lot from the 300 wouldn’t it be better if you had three million right but that’s not the scenario you’re given so you have to make the right choice early to prevent being 80 and potentially healthy yeah and then and then being without any of that 300,000 and having locked in a lower Baseline social security income a much lower amount yeah right yeah right because now that 16,000 difference in this scenario has grown because of cola to what 10 18,000 18,000 now and that’s
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just going to keep drifting it’s going to be 20,000 later so yeah and you know how much do money do you need to generate 18,000 a year in interest you need a lot this is it Tony this this is this is it right here all those numbers and scenarios and people saying well you could do better I could what if what if what if the question always comes down to yeah you could but what if it doesn’t work what if you returns aren’t there what if you do live an average life expectancy to 85 which isn’t outrageous
00:17:41
anymore yeah I mean you I think you had people say well I’d rather uh take Social Security and leave the money that I would have taken to live on uh leave it in my eye or leave it and make you know get a guaranteed 5% and they use that word guarantee which we have you got to avoid guaranteed returns talking about that or relying on them because right now there may be vehicles that give you a guaranteed 5% return but for a very limited time like a CD or a Miga uh and we see right now we’ve seen over the last year those
00:18:20
those terms get shorter and shorter my dad’s bank it’s only like a 4 point it’s down to 4.7 is their big deal for their their uh CDs and it’s only for seven months I mean we talking we’re talking the rest of your life there is no there is no guaranteed return of and maybe people are just saying the markets I can make a I I can make at least 5% uh returns every year on my money if I leave them in an IRA in the markets and Dan you and I know you can maybe but what if you need that to live in this do
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all of a sudden when you’re taking money out it doesn’t matter what your return is because eventually you’re still spending more than the interest you’re going to make yeah right yeah yeah granted if you could if you could make all the money you need to live at a 4% fixed return you can manage that but that’s not the scenario we’re we’re we’re dealing with here so no you’re gonna need much more money in the bank to be able to live off that interest that’s for sure right so everyone’s
00:19:27
scenario is different and the changes based on the assets you have your spending is also really important and what else is going on in your life but I just wanted to bring home this graph to show people yeah you can which would you rather have in this scenario and it’s a huge huge decision at that you have to make at 65 um in this scenario now again 62 or 62 right you could take it at 62 um you know and waiting to 70 is painful but sometimes that pain makes up for it and it could be quite a Dramatic Makeup
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later now of course there’s always a lot of different scenarios I’m going to throw one at you Tony that will blow this whole thing out of the water what if there’s a home that you own with home equity what if you use that what if you own a $300,000 home Home Free and Clear what if you took that money and helped to live would that change your Social Security fining decision absolutely but I’m not gonna get into that today I’m not gonna get because that’s a whole different so there’s so many different
00:20:30
scenarios that going throw what if this right keyock loans and and reverse mortgages all of a sudden it’s like well if I do that then maybe I can delay or maybe I should take it early because I have the home equity I can use for again everyone sit situation is different but don’t knock the idea that you that that claiming Social Security delaying it uh is a bad thing because you your situation the math shows different maybe you’re right but maybe you’re wrong why don’t you do the math why don’t you run
00:21:00
the scenarios and run the software it’s easy for me to do but I can always tweak things to make make it more real for your situation my conclusion doesn’t change from last week Tony spending down Ira assets early in order to delay Social Security does make sense for a lot of people in this scenario we showed it how it makes dramatic sense but it’s a personalized decision that’s for everyone do the math run the numbers do the software analysis think it through consider taxes consider all the other
00:21:35
things that go into it and then make your decision yeah because the software you’re talking about you input all their personal data and their personal situation and it does over 20,000 calculations I mean you’re I just don’t and there’s no reason not to it’s there’s not a charge to have the Social Security maximization report run um I know my wife and I wouldn’t file we’re not going to file for Social Security without having uh we we had one run Just for kicks based on some assumptions but
00:22:07
when we get closer to 62 when you get close to 62 or retirement uh when you’re going to take Social Security you got to have that run you gotta you got to talk to a professional who’s going to sit down and look at your situation from above no emotions no influence from your brother-in-law or the guy down the street but from a fidu hey what’s in your best interest um yeah and I mean because there’s a lot of people with opinions about social security as we find out every time we do a social
00:22:39
security show right it’s true it’s true everyone’s got the opinion but who cares who cares what they say do it for yourself and run your own math you know and Tony by the time you’re 70 it’ll only be you and your wife and your youngest daughter living with you and um oh no hey wait a minute who’s living with me oh Dan you had to poke you had to poke no she’ll be out in the world contributing away from you well well Dan I think to end the show I just have one thing God bless Social Security indeed
00:23:11
Tony thanks for a good show we’ll catch everyone next week all matters discussed in today’s show for informational purposes only this show is not investment advice Dan wi nor dolphin Financial Group are affiliated or endorsed by any government agency investment advisory services are offered through dolphin Wealth Management Inc a registered investment adviser in the State of Florida Insurance products and services are offered through Dolphin Insurance Inc dolphin Wealth Management Inc and dolphin Insurance Inc are
00:23:40
affiliated companies doing businesses as dolphin Financial Group you should talk to someone at Dolphin finan group before implementing any of these strategies or ideas