Maximizing Your Retirement: Why Raleigh Retirees Should Rethink Social Security Timing & Roth Conversions
The decision when to claim Social Security requires careful coordination between tax planning and distribution planning from taxable, tax-deferred and tax-free accounts.
Advice on when to claim Social Security is everywhere, but following the wrong tip could cost you hundreds of thousands of dollars over your lifetime. For married couples in Raleigh, NC, maximizing these benefits is one of the most powerful forms of "longevity insurance" available.
At Ark Royal Wealth Management, we believe the Social Security decision shouldn't be made in a vacuum. It must be part of a complete retirement income plan that considers your entire tax picture.
The Case for Delaying Social Security in Raleigh
In a recent case study, we looked at Bob and Sarah, a couple aged 65 with a $2.3 million portfolio. While they initially planned to take Social Security at 65, we helped them create a plan to bridge their cash flow needs, allowing Bob to delay his benefits until age 70.
Why wait? * Preferential Tax Treatment: You only pay federal tax on up to 85% of your Social Security benefit.
North Carolina Tax Perks: Most states, including North Carolina, do not tax Social Security benefits at all.
Increased Lifetime Income: By age 70, Bob and Sarah's combined benefit is projected to be approximately $82,000 per year.
The "Hidden" Opportunity: Low-Tax Roth Conversions
The years between retirement and starting Social Security (the "gap years") offer a unique window for partial Roth IRA conversions.
Every dollar pulled from a traditional IRA is taxed as ordinary income. If you turn on Social Security early, you add taxable income during the exact years you want your income to stay low for conversion purposes. By delaying Social Security, Bob and Sarah kept their income low enough to convert assets at a "discount".
Bob & Sarah’s 2026 Strategy:
Goal: Keep Modified Adjusted Gross Income (MAGI) at or below $150,000.
The Benefit: This allows them to take the full standard deduction of $47,500, which includes the $12,000 enhanced senior deduction.
The Conversion: We identified a $75,000 Roth conversion opportunity for 2026.
The Result: Their effective federal tax rate for the year—including the conversion—was just 11.7%.
Long-Term Impact: $400k Converted in 5 Years
By looking at their plan over a multi-year horizon rather than year-by-year, we project Bob and Sarah will convert roughly $400,000 of IRA assets to Roth over five years. They are achieving this while paying an average tax rate of only 11%.
By the time they reach age 70, they will have shifted a massive portion of their wealth into tax-free territory, all while securing a much higher Social Security check for life.
Plan Your Retirement with a Raleigh CFP® Professional
Retirement planning in the Triangle requires more than just a spreadsheet; it requires a strategy that integrates taxes, investments, and timing. The team of Certified Financial Planners (CFP®) at Ark Royal Wealth Management have helped hundreds of families navigate these complex choices. Schedule an introductory call if you'd like to start your retirement conversation today.
