Medicare Roadmap for Turning 65 in NJ

Saving for retirement and living off it are two different problems. Once the paychecks stop, you have to decide which account to draw from first, when to start Social Security, and how to keep taxes from eating more of your income than necessary. Retirement income planning is the piece that ties all of that together, and getting the order wrong can cost you more than picking the wrong investment ever would.

Key Takeaways

Your full retirement age for Social Security is 66 to 67 depending on your birth year, and claiming before or after that age permanently changes your monthly benefit.
Claiming at 62 instead of full retirement age can reduce your benefit by up to 30%, while delaying past full retirement age to 70 increases it by roughly 8% a year.
The order you draw from taxable, tax-deferred, and Roth accounts affects how much tax you pay over your retirement, not just in any single year.
Required Minimum Distributions starting at 73 and Roth conversions done earlier both change how much flexibility you have later.
New Jersey taxes retirement income differently than the federal government, which is one more variable in deciding when to draw from what.

Your full retirement age (FRA) depends on your birth year: 66 for anyone born 1943 through 1954, gradually rising to 67 for anyone born in 1960 or later. Claim before your FRA and your benefit is permanently reduced, by roughly 6.7% a year for the three years right before FRA and about 5% a year beyond that, up to a maximum reduction of about 30% if you claim at 62 with an FRA of 67. Wait past FRA instead, and your benefit grows by about 8% for every year you delay, up until age 70, when the increase stops.

There's no single right age to claim. The math depends on your health, other income, whether you're still working, and whether a spouse's benefit is tied to your decision. What's true for every case is that the decision is permanent once made, which is why it's worth running the numbers for your specific situation (see /social-security-planning) rather than defaulting to whatever age a friend or relative picked.

Most retirees have income spread across a few account types: taxable brokerage accounts, tax-deferred accounts like a traditional IRA or 401(k), and tax-free Roth accounts. The order you draw from each affects your total tax bill over retirement, not just this year's return.

A common approach is to draw from taxable accounts first, since long-term capital gains often get more favorable tax treatment, then tax-deferred accounts, saving Roth withdrawals for last since they're tax-free and don't affect your other taxable income. That said, a flat rule like this doesn't account for your specific tax bracket, upcoming RMDs, or years where pulling more from a tax-deferred account at a lower rate makes more sense than following the order strictly. Some retirees also use a fixed withdrawal-rate rule of thumb to decide how much to take each year, but a flat percentage doesn't adjust for market swings, unexpected expenses, or changes in your account mix, so it works better as a starting reference point than a rule to follow exactly.

Two decisions from earlier in retirement planning show up directly in your income strategy. Required Minimum Distributions force withdrawals from tax-deferred accounts starting at 73, whether you need the income that year or not, which can push you into a higher bracket if you haven't planned around it. Roth conversions done in lower-income years before RMDs start can shrink that future forced withdrawal and give you more tax-free income to draw on later. Both decisions work better when they're made as part of the same income plan rather than handled separately as they come up.

The right income strategy blends Social Security timing, withdrawal order, tax bracket management, and RMD and Roth decisions into one plan, not four separate ones made at different times. Getting it right early in retirement tends to matter more than any single year's investment return.

If you're approaching retirement or already in it and want a clearer picture of how your accounts and Social Security work together, book your retirement review and we'll build the income plan around your specific numbers.

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