In today's world, deciding how to use retirement savings can have profound impacts on individuals' financial futures. One of the hot topics in this area is the choice between withdrawing from a 401(k) and delaying Social Security benefits. The question of whether you should withdraw from your 401(k) to delay Social Security has a simple answer, but this answer is only correct if you pay attention to one key number.
The Financial Impacts of Withdrawing from a 401(k)
Withdrawing from a 401(k) can put you in a better position. Specifically, if you are able to delay receiving Social Security benefits, you may earn more income in the long run. For this reason, accurately calculating this number and its impact on your financial situation is very important.
Typically, individuals between the ages of 62 and 70 decide whether or not to take their Social Security benefits. However, taking Social Security early means a reduction in the monthly amount you will receive in the future. Therefore, delaying benefits can help you increase your total income.
How Should You Decide?
For many individuals, the options ahead may seem unclear. But a simple way to assist your decision-making is to examine this key number: the amount you withdraw from your 401(k) should be such that you can comfortably live until you start receiving Social Security. If this number is higher than you expected, you may need to consider other options.
Overall, considering living expenses, forecasting income, and also future financial needs can help you make a better decision. Ultimately, the goal is to make the best use of your savings while also benefiting from your Social Security.
