I have written extensively about why people should consider postponing Social Security income in order to get a higher future benefit. But that is not the only reason to postpone. Taxes are also a reason, especially in an age where 401(k) and/or IRA assets will make up a large portion of someone's retirement.

Since the 401(k) was created in 1981, people have taken investments out of the taxable world and shifted their savings into the 401(k) and IRA world since they get a tax savings for doing so. But a problem arises when someone turns 70½ and the IRS says they have to pull a certain amount of money out of their 401(K) or IRA based on their life expectancy. Often, this can push their income into a higher tax bracket.

One way to reduce the concern about paying higher taxes after 70½ is to begin taking IRA distributions earlier, while still in lower tax brackets. But achieving lower tax brackets could be difficult if there is pension and/or Social Security benefits coming in. And therein lies the choice: Do you choose to postpone Social Security benefits to keep tax brackets down and instead supplement that income need by taking 401(k) or IRA distributions (or if you do not need the income at all, doing a Roth IRA conversion) in that lower tax bracket? This could help to reduce overall taxes over many years, or even decades, still allowing you to retire when you want on the income you need. This strategy could also hedge inflation a little since postponing Social Security will allow for a higher benefit (and all future cost of living increases will compound that higher number).

If you're considering taking IRA distributions early, you'll need an accountant to run the numbers since the key is to not push income into higher tax brackets, both now and hopefully after age 70½. But for the small cost involved, the payoff could be more money saved, which gives you more money to spend, or even more money to pass on to your heirs.