Broker Check

Retiring Before Age 70??

| March 01, 2019

If you plan to retire before age 70, there is a brief yet magical time you can use financial strategies that may make a substantial change in lifetime assets.


Most people plan to take social security at retirement and save their 401k or IRA for big items farther down the road.  When it comes time for the IRS required minimum distributions from those pre-tax accounts at age 70-1/2, many don’t need (or want) all of the required amount, and it ends up being re-invested in an account paying taxable interest or dividends.


What if you did something different and took funds from your pretax accounts rather than taking your social security right away?  If you had no other taxable income, you could distribute up to $78,950 and be in a tax bracket of 22% or less.  You could withdraw up to $168,400 and still pay no more than 24% in taxes.  (Go over $168,400 and you’re in a 32% bracket – so it’s very important to control your taxable income.) 


What if you don’t need that much annual income?  You could opt for a conversion to a Roth account for the amount in excess of your expenses and pay the taxes now, when you may be in a lower tax bracket!


There are a number of benefits:

  1. Social security benefits will increase annually, to age 70.
  2. By withdrawing from pre-tax accounts earlier, the required minimum distributions may be less, reducing taxable income in future years.
  3. There is no required minimum distribution from the Roth IRA during your lifetime. The assets and their earnings remain non-taxable to your beneficiaries.


These strategies are not for everyone, so be sure to talk to a professional before implementing them.  I hope you will find this time to be magical for you, too!








Laura Mickels has spent more than 30 years working for investors with both Wall Street and independent firms.  CochranMickels Retirement Specialists provides personalized planning and investment services to individuals approaching and in retirement.


These are the opinions of Laura Mickels and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.