Want to Retire Comfortably? Here’s How to Use Your IRA and Social Security the Smart Way

Retirement should mean freedom, not financial stress.

But for millions of Americans, the key to enjoying those years lies in how wisely they manage two major income sources: their Individual Retirement Account (IRA) and Social Security benefits.
 

Making Your Money Last Longer

When you stop working, the challenge shifts from saving money to using it strategically.

The order in which you tap your IRA and claim Social Security can greatly affect how long your income lasts and how much you pay in taxes.

One common strategy is to delay claiming Social Security.

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For every year you wait past your full retirement age, up to age 70, your benefit grows by about 8% per year. This can mean thousands more annually in your later years.

In the meantime, retirees can use IRA withdrawals as a bridge until Social Security payments begin. This “bridge strategy” gives your benefits time to grow while giving you control over your taxable income.
 

Structuring Withdrawals the Right Way

Once retirement begins, it’s crucial to choose which accounts to withdraw from first. Financial experts often suggest this order:

1. Taxable investment accounts first

2. Traditional IRA or 401(k) next

3. Roth IRA last (since withdrawals are tax-free)

This order helps lower your tax bracket and reduce how much of your Social Security benefits become taxable.

Another smart move is Roth conversion, gradually transferring money from a traditional IRA to a Roth IRA.

You’ll pay taxes now, but future withdrawals will be tax-free. Doing this early in retirement, before Required Minimum Distributions (RMDs) kick in at age 73, can minimize taxes later.
 

Staying Prepared and Flexible

Keep one to three years of expenses in cash or short-term bonds to protect against market downturns.

This prevents you from selling investments during a slump. However, avoid holding too much cash, your money still needs to grow to keep up with inflation.

Lastly, consider a flexible spending plan. Instead of withdrawing a fixed amount each year, adjust based on market performance, spend less in tough years, and a bit more when your investments do well.

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