Ask Money

Delaying Social Security

Chris Farrell Jul 13, 2011

Question: My wife will be entering retirement in about a year at 64 1/2 and I will follow soon after. We have about 200k in Roths, 500k in taxable IRAs and about 200k in cash and a pension of 18k a year. We have no debt or mortgage and we own our home. We live a modest lifestyle with estimated cash needs of $50k a year. Our plan is to not take Social Security, live off of our cash and convert taxable IRAs to Roths to minimize or eliminate income tax on this money. What do you think? Ray, Marquette, MI

Answer: The outline of your plan seems sensible. One aspect stood out: It pays to delay taking Social Security if you can. The Social Security payout rises by 8 percent a year for every year of delay after age 62 and before age 70. That’s guaranteed performance is tough to match in the market even by Warren Buffet, the stock picking Wizard of Omaha.

To test your plan in more detail I would recommend taking a look at syndicated columnist Mark Miller’s book, The Hard Times Guide to Retirement Security: Practical Strategies for Money, Work, and Living. It’s a thoughtful review of the key issues for retirees.

Another resource is Henry “Bud” Hebeler’s Getting Started in a Financially Secure Retirement. You can also run various scenarios on one of Hebeler’s retirement planning calculators at his website He has a good calculator for weighing the costs and the benefits of converting your traditional IRA into a Roth, too. (Without running your particular finances it’s hard to say whether conversion makes sense or not.)

Both of these experts will raise the question whether you still want to earn some part-time income in retirement, the so-called job-tirement. It’s a good way to stretch your savings.

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