Retirement Realities
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When to tap retirement income

"If you are still working, try to postpone Social Security until full retirement age," Tepper says. "If you're not working, take it as early as you can, so you can give your investment portfolio a chance to rebound."

The break-even point at which the total Social Security benefit is about the same, whether it's taken in a smaller amount at age 62 or a larger amount at age 65, is about 10 to 12 years, Panaccione says.

3 mistakes to avoid

A few classic mistakes can throw a wrench into the timing machinery. Here are three to watch out for.

Taking out too much money too early. "Overspending early in retirement is definitely a huge mistake," Tepper says.

One rule of thumb is to not spend more than 4 percent of an investment portfolio in the first year. Spending a smaller proportion can allow a portfolio to continue to grow and keep up with the rate of inflation.

Investing too aggressively or too conservatively. Another rule of thumb is to keep three to five years' of expenses -- or more conservatively three to seven years' -- in safe investments, and be slightly more aggressive with money that won't be needed for a longer time.

"You don't want to go too crazy, but if you can handle the ups and downs, you shouldn't lose sleep over (money) you don't need for seven years," Panaccione says.

Overlooking the tax implications of IRA withdrawals. Tapping -- or tapping out -- an IRA too soon can radically alter a senior's tax situation. A typical miscalculation is using the money to pay off a mortgage.

"Say it's a $100,000 mortgage and a $100,000 IRA," Panaccione says. "You yank out the $100,000 to pay off the mortgage, and then you've taken a $100,000 income-producing asset, which gives you tax deferral, out of circulation, and you've gotten rid of your tax break, so maybe now, you can't itemize."

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