Whether to Claim SSI or Withdraw from 401K

Originally published: August 19, 2022

Updated: August 10, 2026

Consider what you might be giving up.

Markets have pushed to near record highs in recent years, but the rally has been unusually narrow — led by a handful of AI-driven technology stocks — while sector rotation and persistently sticky inflation continue to create uncertainty for retirees’ and pre-retirees’ portfolios.

Those at an age to claim Social Security may be thinking about claiming sooner than previously planned to give them a steady source of income while giving their broader portfolio room to navigate that uncertainty.

There is no right answer to when to claim Social Security. An individual receives 100% of the benefits they’re owed at full retirement age, which also depends on when they were born.

Retirees can begin claiming as early as age 62, but any time before full retirement age results in a reduced benefit. Individuals can also receive more than what they’re owed for every month they delay up to age 70. Benefits are based on a formula that factors in age and earnings history.

There’s also no right time to start withdrawing from a retirement account, or exact amount a person should take from these accounts every month. The 4% rule, which suggests individuals take 4% of their portfolio balance every year to stretch their money over their retirement, has been widely contested in recent years. Some experts still recommend closer to 3%, while others — including Bill Bengen, the economist who originated the 4% rule — now argue for withdrawal rates as high as 4.7% to start, depending on market valuations and how long the money needs to last (https://www.kiplinger.com/retirement/retirement-planning/the-4-rule-gets-a-closer-look).

Market volatility and rising inflation has been a big concern for Americans of all ages, but for retirees it can be especially stressful as they tend to live on fixed budgets after leaving the workforce. Taking too much from an investment portfolio can trigger the sequence of returns risk, which is when a portfolio has fewer assets in it to grow when the markets rebound. Beginning Social Security too early, on the other hand, results in a permanently reduced benefit for the rest of one’s lifetime.

There’s certainly interest in taking from a 401(k) in an effort to postpone Social Security benefits. In a study about a 401(k) bridge option, which is when investors use assets from their retirement accounts equivalent to Social Security benefits so that they can delay claiming, between roughly 27% and 35% of people who were given information about this option said they would consider using it, depending on how the option was presented (https://crr.bc.edu/wp-content/uploads/2021/12/wp_2021-27.pdf). This survey, conducted by NORC at the University of Chicago and the Center for Retirement Research at Boston College, was likely the first time these respondents had heard of a “bridge,” and if there were more exposure to this option in retirement accounts, more Americans may choose it in their own retirement journeys, says Alicia Munnell, senior advisor and former director of the Center for Retirement Research at Boston College (https://crr.bc.edu/alicia-munnell-to-step-down-as-center-for-retirement-research-director/).

Of course, waiting to take Social Security isn’t always the best option either. One of the many factors retirees should consider when deciding when to claim includes medical history and status as well as longevity – someone who only expects to live to their mid-70s wouldn’t enjoy the benefits they worked hard for if they only started claiming at 70. In other instances, people may use Social Security as one component of their retirement income strategy, pairing it with annuities or a pension, and would rather their retirement savings vehicles, like a 401(k) or an IRA, continue to grow for the decades to come.

Another option to consider is a fixed index annuity. In a fixed index annuity, a portion of your money can be set to grow with the index of the market, but never risk loss. Fixed index annuities help both savings and benefits last longer, helping provide an experience of lifelong savings and income that retains its buying power both now and in the future.

At Summerlin Benefits Consulting we want to make sure your money is protected no matter how markets are performing. Our team of advisors will work with you to figure out the best vehicle for protecting your retirement nest egg, so that you can feel confident no matter what happens in the market.

Important Tax and Legal Information

Note: This content is for informational purposes only and does not constitute tax or legal advice. Summerlin Benefits Consulting does not provide social security, specific advice related to taxes, or legal advice. Consult a tax/legal professional for guidance with your individual situation.

Important Retirement Planning Information

Every retirement strategy is unique, and not all annuity products offer the same features, guarantees, or level of protection. References in this article apply only to the specific retirement solutions discussed and should not be interpreted as applying to all annuities. The right strategy depends on your individual goals, financial situation, and retirement objectives. This is something Summerlin Benefits Consulting can help you determine.