Generate income while waiting to claim Social Security


Four ways you can generate income.

When you begin to claim your Social Security benefits is a personal decision affected by many factors. Generally, if you can, it’s best to wait until you reach full retirement age—or longer. If you wait to claim Social Security after your full retirement age, your benefits increase by a fraction of a percentage each month, up to age 70. But you’ll need income to live off of in the meantime.

Here are four ideas to help you generate income while you’re waiting to claim Social Security.

Ladder CDs and bonds

With both certificates of deposits (CDs) and bonds, you invest a certain dollar amount for a number of years, and then receive back your initial investment plus the interest it has earned. You can ladder CDs and bonds by buying investments that mature at different rates—say one, two, three and five years.

If interest rates are low, consider buying shorter-term CDs and bonds and then reinvest matured funds at a higher interest rate.


You can structure an annuity to pay out funds beginning at a certain date and continuing monthly, quarterly or annually for a fixed amount of time...say, until you claim your Social Security benefits.

Money invested in an annuity grows tax-free, although you will be taxed on earned income when you make withdrawals. (Annuities are known to have high fees, so be sure you understand what you’re purchasing.)  

401(k)s and IRAs

You’ve saved this money for retirement, so take advantage of it! You can begin withdrawing funds from your 401(k) and IRA at age 59½ . And doing so may help with your taxes, too. Depending on your adjusted income, you may be taxed on a portion of your Social Security benefits—generally either 50% or 85% of your benefits could be taxed. But that’s a big jump, and it only requires a modest increase in income to reach that 85% mark.  Withdrawing from your 401(k) or IRA accounts now, before you claim your benefits, could help keep you at the lesser taxable rate. (This handy calculator can help you determine how much of your income will be taxed.)

Working part-time

Yes, you retired for a reason. But working part-time can help supplement your income until you claim your Social Security benefits. And, if you find something you enjoy, you may just want to continue at it when you do begin claiming your benefits! (Working while claiming benefits could potentially reduce your benefits. Learn more here.)

This article contains general information. Individual financial situations are unique; please, consult your financial advisor or tax attorney before utilizing any of the information contained in this article.

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Source: AARP, Kiplinger, Money over 55, iStockAnalyst
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