In addition, with the current high market value, taking withdrawals from a portfolio now will not deplete the portfolio as much as they would if the market makes a correction, says Jaffe. When a retiree hits 70.5 years of age, a minimum distribution amount is required to be taken from an IRA or 401(k). If some money has already been withdrawn before the person reaches 70.5, the required minimum distribution will be less and the tax burden decreased accordingly.
“Each client’s situation is different,” notes Jaffe, so the tax implications must be determined for each retiree. “But advisors may want to help clients build an income bridge so Social Security benefits can be delayed until they reach their maximum.”