A 64-Year-Old Couple Ran the Numbers on Claiming Social Security Early and Spending the 401(k) Later. They Had It Backwards.
Claiming Social Security at 64 while letting the 401(k) compound sounds like a smart hedge, but the math behind that sequence hides a tax trap most couples never see coming until it is too late to undo.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
The pitch sounded reasonable at the kitchen table. Claim Social Security now at 64, let the 401(k) keep compounding, and spend down the portfolio in their late 70s and 80s when they need it more. A recent Investopedia piece noted how few retirees actually wait as long as possible to claim benefits. This couple was about to join the majority. The math argues they should flip the plan.
Assume a $1.4 million 401(k), both spouses turning 64, and Social Security primary insurance amounts of roughly $2,900 and $1,900 per month at full retirement age. Claiming early permanently reduces those checks. Waiting until 70 does the opposite, and the compounding effect is larger than most people realize once the annual cost-of-living adjustment is layered on.
Why Delaying the Check Beats Delaying the Withdrawal
Delayed retirement credits add roughly 8% per year between full retirement age and 70. That increase then compounds against every future COLA. The 2027 adjustment is currently tracking toward 3.3%, with two of the three Q3 months in, driven by CPI-W readings of 327.104 in July 2026 and 328.481 in August 2026. A COLA applied to a benefit worth roughly 76% more at 70 than at 62 puts more real dollars in the mailbox every year for the rest of both lives, and, critically, for the survivor.
The 401(k) does not need to match that. It needs to bridge six years of spending. Average annual household expenditures were $78,535 in 2024, and most 64-year-old couples in this balance range spend more. Pulling $90,000 to $110,000 per year from the 401(k) between 64 and 70 leaves the portfolio bruised but intact, and the higher lifetime Social Security stream more than compensates.
Bridge Years Are a Tax Planning Gift
Here is the part most couples miss. Between 64 and 70, with no Social Security coming in and no wages, taxable income drops to whatever the couple pulls from the 401(k). The 2025 married filing jointly brackets run 10% to $23,850, 12% to $96,950, and 22% to $206,700. A $110,000 withdrawal after the standard deduction sits comfortably in the 12% band.
That opens the door to Roth conversions at bargain rates. Every dollar converted now is a dollar that will not be part of an RMD at 73, will not push provisional income above the 85% Social Security taxation threshold later, and will not count toward the IRMAA lookback that governs Medicare Part B and D premiums two years down the road. Waiting until the 401(k) is untouched and Social Security is flowing does the opposite: it stacks ordinary income on top of taxable benefits, and marginal rates near 40% appear where a 12% rate used to live.
Where to Park the Bridge Cash
Money earmarked for the next 12 to 24 months of withdrawals belongs in something predictable. The FDIC national average 12-month CD is 1.71%, but shelf rates run higher. Short Treasuries are paying materially more: the 6-month is 4.17% and the 1-year is 4.39% as of September 15, 2026 — call it near 4.2% and close to 4.4% in round terms. A simple ladder of 6-month and 1-year Treasuries funds the bridge without market risk.
Three Moves to Make Before Year-End
- Model the delay-to-70 scenario against a claim-now scenario using your actual SSA statement. Include survivor benefits. The higher earner’s decision sets the floor for whichever spouse lives longer, and that alone often reverses the intuition to claim early.
- Fill the 12% bracket with Roth conversions every year from 64 to 72. If ordinary withdrawals total $110,000, there is room to convert additional traditional 401(k) or rollover IRA dollars before hitting the 22% bracket at $206,700 of taxable income. Stop short of the first IRMAA tier once Medicare enrollment approaches.
- Build a two-year cash bridge with short Treasuries. Locking in roughly 4.2% on the 6-month and 4.4% on the 1-year removes sequence-of-returns risk from the exact years the 401(k) is doing the heavy lifting.
The couple who claims at 64 and preserves the 401(k) locks in a smaller benefit for life and walks into RMDs with a fully loaded pretax account. The couple who spends the 401(k) first and waits on Social Security ends up with a smaller taxable balance, a larger inflation-adjusted government check, and a stronger position for the surviving spouse. Same assets, opposite outcomes.
Contact [email protected] for any questions or corrections.