The SEP-IRA is a terrific accumulation tool for workers who are self-employed, have a family business, or who have earnings as a 1099 Independent Contractor. SEP stands for Simplified Employee Pension, but the account functions similar to a Traditional IRA. Money is contributed on a pre-tax basis, and then withdrawals in retirement are taxable. Distributions taken before age 59 1/2 may be subject to a 10% penalty.
Delaying Social Security retirement benefits can significantly increase your monthly checks — sometimes by 24% or more — and provide more lifetime income for retirees. This article explains the 2026 rules for claiming, the benefits of waiting, and how this decision fits into a retirement income plan. We work with retirees and pre-retirees with $500,000–$5 million in assets.
In 2026, Social Security retirement benefits receive a cost-of-living adjustment (COLA) of 2.8%, increasing average monthly payments for retirees. The average benefit will be about $2,071 per month in 2026, up from around $2,015 in 2025, and the maximum benefit for someone who delays until age 70 can exceed $5,200 per month.
A 2.8% COLA helps protect retirees against inflation, but most retirees still find it difficult to keep pace with rising costs, especially for healthcare and housing.
Age 62: Earliest eligibility — benefits are permanently reduced compared to later claiming.
Full Retirement Age (FRA): 67 for anyone born in 1960 or later; benefits at this age are unreduced.
Age 70: Maximum benefit age — delayed retirement credits stop after age 70.
Because FRA has fully risen to age 67 for newer retirees and stays there under current law, most people born in 1960 or later should plan around age 67 as the baseline for full benefits.
Delayed Retirement Credits (DRCs) boost your monthly benefit by about 8% for each year you delay past FRA up to age 70. This means:
If your FRA benefit is $2,000 per month, waiting to age 70 could increase it to about $2,480 monthly — roughly a 24% increase.
These increases last for life and are adjusted annually with COLA.
The idea is simple: claiming later means a smaller number of larger checks, versus a larger number of smaller checks if you claim early.
Claiming at age 62:
Can result in up to a 30% permanent reduction in monthly benefits compared with claiming at your FRA. You can receive income sooner, but the benefit is smaller for life.
Many people claim early because they need the income, but that choice often costs tens of thousands of dollars over a lifetime compared with waiting if they have the savings cushion to delay. Social Security decisions should not be made in isolation, but coordinated with investments, taxes, and withdrawal strategy as part of an overall retirement income planning approach.
If you claim before FRA and continue working:
The earnings test may temporarily withhold some benefits if your income exceeds the 2026 limits.
For those under FRA: about $24,480
In the year you reach FRA: about $65,160
Any withheld benefits are credited back when you reach FRA so they are not permanently lost.
Not always — but for many pre-retirees and retirees with healthy life expectancies and sufficient savings, delaying benefits until age 70 can offer the strongest long-term financial outcome. Here’s why:
Guaranteed higher lifetime income: Waiting adds DRCs up to age 70.
Protection from longevity risk: Larger lifetime checks help cover decades of retirement. If you are worried that you will live to be 95 or 100 and run out of money, delaying benefits can actually help.
Coordination with other income: Larger Social Security benefits can reduce the need to draw down other retirement savings in your seventies.
However, waiting makes sense only if you:
Have enough cash flow or savings to bridge the gap
Are in reasonably good health
Have not already locked into significant medical or living expenses early in retirement
Choosing when to claim Social Security is not just a number-crunching exercise — it’s a major retirement decision that interacts with:
Your overall retirement income strategy
Roth conversion timing
Sequence of returns risk
An effective claiming strategy considers all of these rather than isolating Social Security alone. For example, coordinating your Social Security timing with a Roth conversion can reduce your taxes and spread taxable income over years — a key component of a comprehensive retirement plan. You might find our Questions to Ask a Financial Advisor and Who We Help pages helpful when evaluating professional guidance. Read about hiring an advisor vs DIY.
This topic is often part of a broader retirement or tax planning conversation. If you’d like help applying these ideas to your own situation, you can request an introductory conversation here.
Scenario 1 — Claim at Age 62:
Immediate income, but about 30% lower monthly benefits than claiming later.
Suitable for retirees needing earlier cash flow and limited savings.
Scenario 2 — Claim at FRA (67):
Full benefits with no reduction.
Balances early retirement income with higher long-term benefit.
Scenario 3 — Claim at 70:
Maximum benefit with roughly 24% more than FRA benefits due to DRCs.
Often best for healthy retirees with adequate savings to wait.
What is full retirement age in 2026?
Your full retirement age (FRA) is age 67 for those born in 1960 or later,
How much can Social Security benefits increase by waiting?
If you delay benefits from 67 to age 70, your monthly benefit may increase by up to about 24% from delayed retirement credits. If you delay from 62 to 70, your monthly benefit will be 77% higher.
Can I work and claim Social Security in 2026?
Yes — but if you claim before FRA and earn above the earnings limits, some benefits may be withheld temporarily before FRA.
One of my favorite features in Morningstar is the “Tax” tab which allows you to compare the pre-tax return and tax-adjusted returns of mutual funds and ETFs. Many investors never bother to consider the tax-efficiency of their investments, but if you are investing in a taxable account, this is a key consideration.
With interest rates so low today, investors wonder where they can keep their money safe both in terms of their principal and purchasing power. We recently discussed Fixed Annuities as one substitute for CDs or bonds, with the conclusion that Annuities are best for investors over 59 1/2 who don’t need liquidity for at least five years. For others, one often overlooked option is Inflation-linked Savings bonds, officially known as Series I Bonds.
Trust is earned and not given. While there’s no shortcut to years of working together and getting to know each other, there is one question that every client should ask their advisor: Are you a Fiduciary?
A Fiduciary has a legal obligation to place your interests ahead of their own. The alternative, of course is a salesperson whose purpose is self-serving: to represent their company and maximize profits. Which would you trust for objective, unbiased advice?
A 2013 study from Prudential considered whether a hypothetical 65-year old female retiree would have enough retirement income to last her lifetime. In their scenario, they calculated a 21% possibility of failure, given market volatility and longevity risk. When they added in a third factor of “an extended period of low interest rates”, the failure rate rose to 54%.
“It doesn’t matter how much you make, but how much you keep.” Over time, taxes can be a significant drag on returns, especially for those who are in the higher tax brackets. Today, many families are also hit with the 3.8% Medicare surtax on investment income. If you are in the top tax bracket, you could be paying as much as 43.4% (39.6% plus the 3.8% Medicare surtax) for interest income or short-term capital gains.
One of the most frequent questions I hear from younger investors is whether they should hold off on investing until they pay off their student loans. College tuition has been growing at a rate much higher than inflation for several decades, and for many students, these costs are financed. It’s not uncommon for a student to graduate with six-figures in debt today.
For many, they view their college loans as the monkey on their back and want nothing more that to get rid of this debt as soon as possible. This intense dislike of debt is probably a good thing, especially if it encourages frugal decision making and a focus on financial responsibility. With retirement being 40 years away, investing doesn’t seem to offer the same immediate benefit as plowing as much cash as possible into eliminating student loans.
The problem with waiting to invest is that you miss out on the benefits of compounding. Let’s say Eager Eddie saves $5,000 a year starting at age 30. Earning 8%, Eddie will have $861,584 in his retirement account at age 65. Waiting Walter delays until age 40 to get started, but then invests double of what Eddie saved, $10,000 a year. Believe it or not, at age 65, Walter will still have less than Eddie, only $731,059. Waiting those ten years cost Walter $130,000, even though he contributed twice as much per year once he got started. When it comes to retirement saving, there truly is no making up for lost time.
By contributing to your retirement plan at work, you may be eligible for a company match. But even if there is not a company match, being able to make a tax deductible contribution will provide an immediate benefit of 25%, 28% or more, depending on your tax bracket.
Some will point out that with interest rates of 6% or higher, that there is no guarantee that their investment return will exceed the rate they would save on paying down their loan. Wouldn’t it be better to take the “sure thing” of saving 6% rather than the venturing into the unknowns of the investment world? The problem with this line of thinking is that your debt will decrease each year, so a 6% interest rate will cost fewer and fewer dollars each year. However, as your investment portfolio grows through contributions and compounding, a 6% return will equate to larger dollar growth rates. In other words, a 6% return on a $500,000 portfolio is ten times more than a 6% cost on a $50,000 loan.
My advice is don’t wait to get started investing. It’s not a choice of either-or; you have to find a way to do both investing and paying off your student loans.
A couple of additional considerations:
When the market is down, it hurts to look at your portfolio and see your account values dropping. And when we experience pain, we feel the need to do something. Unfortunately, the knee-jerk reaction to sell everything almost always ends up being the wrong move, a fact which although obvious in hindsight, is nevertheless a very tempting idea when we feel panicked.
Even when we know that market cycles are an inevitable part of being a long-term investor, it is still frustrating to just sit there and not do anything when we have a drop. What should you do when the market is down? Most of the time, the best answer is to do nothing. However, if you are looking for ways to capitalize on the current downturn, here are five things you can do today.
1) Put cash to work. The market is on sale, so if you have cash on the sidelines, I wouldn’t hesitate to make some purchases. Stick with high quality, low-cost ETFs or mutual funds, and avoid taking a flyer on individual stocks. If you’ve been waiting to fund your IRA contributions for 2015 or 2016, do it now. Continue to dollar cost average in your 401k or other automatic investment account.
2) If you are fully invested, rebalance now; sell some of your fixed income and use the proceeds to buy more stocks to get back to your target asset allocation. Of course, most investors who do it themselves don’t have a target allocation, which is their first mistake. If you don’t have a pre-determined asset allocation, now is a good time to diversify.
3) Harvest losses. In your taxable account, look for positions with losses and exchange those for a different ETF in the same category. For example, if you have a loss on a small cap mutual fund, you could sell it to harvest the loss, and immediately replace it with a different small cap ETF or fund.
By doing an immediate swap, you maintain your overall allocation and remain invested for any subsequent rally. The loss you generate can be used to offset any capital gains distributions that may occur later in the year. If the realized losses exceed your gains for the year, you can apply $3,000 of the losses against ordinary income, and the remaining unused losses will carry forward to future years indefinitely. My favorite thing about harvesting losses: being able to use long-term losses (taxed at 15%) to offset short-term gains (taxed as ordinary income, which could be as high as 43.4%).
4) Trade your under-performing, high expense mutual funds for a low cost ETF. This is a great time to clean up your portfolio. I often see individual investors who have 8, 10, or more different mutual funds, but when we look at them, they’re all US large cap funds. That’s not diversification, that’s being a fund collector! While you are getting rid of the dogs in your portfolio, make sure you are going into a truly diversified, global allocation.
5) Roth Conversion. If positions in your IRA are down significantly, and you plan to hold on to them, consider converting those assets to a Roth IRA. That means paying tax on the conversion amount today, but once in the Roth, all future growth and distributions will be tax-free. For example, if you had $10,000 invested in a stock, and it has dropped to $6,000, you could convert the IRA position to a Roth, pay taxes on the $6,000, and then it will be in a tax-free account.
Before making a Roth Conversion, talk with your financial planner and CPA to make sure you understand all the tax ramifications that will apply to your individual situation. I am not necessarily recommending everyone do a Roth Conversion, but if you want to do one, the best time is when the market is down.
What many investors say to me is that they don’t want to do anything right now, because if they hold on, those positions might come back. If they don’t sell, the loss isn’t real. This is a cognitive trap, called “loss aversion”. Investors are much more willing to sell stocks that have a gain than stocks that are at a loss. And unfortunately, this mindset can prevent investors from efficiently managing their assets.
Hopefully, now, you will realize that there are ways to help your portfolio when the market is down, through putting cash to work, rebalancing, harvesting losses for tax purposes, upgrading your funds to low-cost ETFs, or doing a Roth Conversion. Remember that market volatility creates opportunities. It may be painful to see losses today, but experiencing the ups and downs of the market cycle is an inevitable part of being a long-term investor.
A Qualified Charitable Distribution (QCD) allows individuals age 70 ½ and older to transfer money directly from their traditional IRA (or eligible inherited IRA) to a qualified charity and exclude that amount from taxable income. This can reduce your reported income while supporting your preferred charities — without needing to itemize deductions.
Who qualifies?
To make a QCD in 2026, you must be at least 70 ½ years old on the day of the transfer. The age requirement remains tied to 70½ even though the age for Required Minimum Distributions (RMDs) has increased (73 under SECURE 2.0 and later to 75).
Where can the funds come from?
QCDs must come directly from a Traditional IRA or a qualifying Inherited IRA. Employer plans such as 401(k)s, 403(b)s, and 457 plans are not eligible unless first rolled to an IRA.
How much can you give?
For 2026, the maximum annual QCD limit is $111,000 per individual, indexed for inflation (up from the prior $100,000 cap). A married couple can each make a QCD from their own IRA up to the annual limit.
Does a QCD count toward my RMD?
Yes — if you are already required to take an RMD, a QCD can be used to satisfy all or part of that year’s RMD requirement without increasing taxable income. However, QCDs made before RMD age do not count toward future RMDs.
Where must the money go?
The distribution must go directly from your IRA to a qualified public charity — not to a donor-advised fund, private foundation, or supporting organization — to qualify for the tax treatment.
QCDs are particularly useful if you want to:
For a deeper look at how distributions fit into a retirement income plan, see our Retirement Income Planning Hub.
RMD age vs. QCD age
Even though the RMD age has risen to 73 (and will later increase to 75), the minimum age for QCDs remains 70 ½. That means you can make QCDs before you are required to take RMDs, though they only count toward RMDs once you are subject to them.
Standard deduction and tax planning
Because QCDs exclude income rather than providing an itemized deduction, they can be especially helpful for retirees who take the standard deduction but still want to reduce taxable income.
Charitable vehicles that don’t qualify
Gifts to donor-advised funds, private foundations, or supporting organizations generally do not qualify as QCDs, even if they are IRS-recognizable charities.
Q: Can I make a QCD from a Roth IRA?
Technically, yes, but QCDs from Roth IRAs are uncommon because Roth IRA distributions are generally already tax-free. Most QCD planning focuses on traditional IRAs or inherited IRAs.
Q: If I make a QCD that is larger than my RMD for the year, does it count toward future RMDs?
No. A QCD larger than your RMD only applies to the current year’s RMD requirement. Future RMDs must be met separately.
Q: When is the deadline to make a QCD?
A QCD must be completed by December 31 of the tax year for it to count in that year. There are no extensions beyond year-end.
Q: Are QCDs deductible on Schedule A?
No. QCDs are excluded from income rather than taken as an itemized deduction, which means they reduce taxable income without needing to itemize.
Q: Can my spouse and I both make QCDs?
Yes — if both spouses are at least 70 ½, each can make a QCD up to the annual limit from their respective IRA.
Required Minimum Distributions (RMDs) & Timing – How RMD timing affects taxable income and planning.
Retirement Tax Planning – A broader look at taxes in retirement.
Social Security Timing Decisions – How benefit timing interacts with income and AGI.
How to Reduce IRMAA – Approaches to managing Medicare surcharges.
Qualified Charitable Distributions can be a thoughtful part of retirement income and tax planning — especially when integrated with timing for RMDs, Social Security, and Medicare premiums. If you’d like a planning-first look at how QCDs might fit into your overall retirement strategy, you’re welcome to Request an Introductory Conversation.
Good Life Wealth Management LLC is a registered investment advisor offering advisory services in Arkansas, Texas, and in other jurisdictions where exempted. Fiduciary retirement planning for retirees and pre-retirees nationwide | $500k–$5M portfolios | Remote-friendly
214-478-3398
