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Jerry's financial profile indicates a net worth of $2 million, comprising a $500,000 taxable account and a $1.5 million 401(k). He has a risk-positive investment strategy, anticipating an 8% annual return on his portfolio. With an annual living expense of $120,000, Jerry plans to withdraw funds from his investment accounts until filing for benefits.
If Jerry waits for benefits until age 70, he avoids taking social security checks at 67. However, the consequences are twofold: first, he must withdraw more from his taxable account to cover expenses, depleting it sooner. Once depleted, he will face higher taxes as he draws from his 401(k), prompting even larger withdrawals to meet his needs.