Why a 65-Year-Old With $1.8 Million Is Spending Her 401(k) Before Claiming Social Security at 70

A 65-year-old single woman walks into retirement with $1.8 million in a traditional 401(k), $250,000 in a taxable brokerage, and $100,000 in cash. She wants to spend $80,000 a year. The forum default is to file at full retirement age 67 and let the 401(k) keep compounding. A better sequence flips that: she lives off the 401(k) and brokerage from 65 to 70 and lets the Social Security check grow.

Why the bridge years are worth more than the deferral

Her benefit at full retirement age would be $36,000 a year. Waiting until 70 turns that into $44,640 a year, courtesy of the 8% delayed retirement credit per year past FRA. Run that to age 90 and the extra check is worth $172,800 in nominal dollars, before any cost-of-living adjustment compounds on the larger base. Given that CPI has climbed from 321.4 in June 2025 to 332.4 in April 2026, locking in a bigger inflation-adjusted base matters more than it did a few years ago.

The five-year drawdown math

Five years of $80,000 spending equals $400,000. Pulling roughly half from the 401(k) and half from the brokerage keeps her in the lowest two federal brackets the entire time. $40,000 from the 401(k) minus the roughly $16,550 standard deduction available to a single filer 65 or older leaves about $23,450 of taxable income. That sits inside the 12% bracket, which runs up to $50,400 for single filers in 2026, and produces roughly $2,700 in federal tax per year, or about $13,500 across the bridge.

The brokerage half is even cheaper. Long-term capital gains stacked on top of that low ordinary income largely fall inside the 0% capital gains rate, and any unrealized losses can be harvested to offset future gains.

The RMD and Social Security tax cascade she avoids

Draining roughly $200,000 from the 401(k) during the gap reduces her year-one RMD at 73 by about $7,800. That alone is meaningful, but the real prize is the provisional-income math. Once Social Security starts, single filers see up to 50% of benefits become taxable above $25,000 of provisional income and up to 85% above $34,000, thresholds that have not been indexed since 1984.

A bigger Social Security check at 70 displaces the 401(k) withdrawals that would otherwise push her over those cliffs. A retiree in the 22% bracket who simultaneously triggers 85% Social Security taxation and an IRMAA Medicare surcharge can face an effective marginal rate near 40% on the next dollar pulled from the 401(k). The bridge strategy keeps her below that trap.

Even the rate backdrop cooperates. With the Fed Funds Rate near 4%, down from about 5% a year ago, her $100,000 cash bucket and short-duration bonds inside the 401(k) still earn a real return, so the bridge does not bleed purchasing power while it works.

What to do in the next 30 days

1. Map the bracket fill. Pull only enough from the 401(k) each year to bring taxable income to the top of the 12% bracket. With the 2026 single 12% bracket ending at $50,400, that leaves room for small bracket-filling Roth conversions inside the same window, shrinking future RMDs further.
2. Run the brokerage first on appreciated lots with offsetting losers. Harvest losses while drawing it down so that capital gains stay inside the 0% rate and never collide with the eventual Social Security check.
3. File for Social Security the month you turn 70. Delayed retirement credits stop accruing at 70. Waiting a single extra month past that birthday is pure forfeited income.

The arithmetic favors the reverse sequence. Spend the tax-deferred dollars while the standard deduction is shielding them, and let the inflation-protected government annuity grow to its largest possible base.