Personal Finance

Claim Social Security Vs Tap Savings: Which Should You Do First?

Maurie Backman

Published: February 24, 2025 11:38 am

Once you retire, you’re going to need access to steady income in the absence of having a regular paycheck to fall back on. And in that regard, you may have choices.

If you’re at least 62 years old, you’re eligible to claim Social Security and start collecting a monthly benefit. You’re also old enough at that point to tap your IRA or 401(k) plan without a penalty.

It begs the question: Is it better to start tapping your savings first once you’ve retired? Or should you claim Social Security first and leave your savings alone as long as possible?

The answer isn’t so simple. And it really boils down to individual circumstances.

There are pros and cons to each

The upside of leaving your savings alone for longer is that you can allow that money to continue enjoying tax-advantaged growth.

If you have a traditional IRA or 401(k), your investments can grow on a tax-deferred basis. If you have a Roth IRA or 401(k), your investments actually get to grow tax-free. So it’s a good thing to leave them alone as long as you can.

On the other hand, there’s an upside to delaying Social Security, too. The longer you wait to claim benefits, up until age 70, the more guaranteed monthly income you get for the rest of your life.

Your savings, on the other hand, are not guaranteed. So in some ways, locking in a higher Social Security benefit might offer more long-term protection.

Factors to consider

Whether you should dip into your savings first in retirement versus claim Social Security first needs to hinge on a few factors that are specific to you.

First, what do your savings look like? If you don’t have a lot, you may want to try to preserve your nest egg, because you might need that money for some type of emergency down the line. So that would make the case for filing for Social Security ahead of tapping your IRA or 401(k).

Now let’s say you have decent savings and aren’t necessarily at risk of running out soon. You’ll then need to ask yourself what market conditions are like.

If the market is in the midst of a slump, and selling investments now for cash means locking in permanent losses in your portfolio, then you may want to claim Social Security first and use that money to cover living costs instead. Riding out a market downturn could result in your savings lasting much longer all-in.

Finally, consider your life expectancy. If you have reason to think you’ll live a long life, then you may want to tap your savings first and lock in a more generous Social Security benefit, since it’s guaranteed for the rest of your retirement — however long that ends up being.

All told, it’s not an easy decision. So one final thing you may want to do is consult a financial advisor and get their opinion. A financial advisor can review these and other circumstances that are specific to you and help you arrive at a decision that makes sense.