How a Social Security Bridge Works

By Justin Pritchard, CFP®

Social Security is an essential part of retirement income for most people, and people typically claim benefits “early.” You can begin your retirement income as early as age 62, and age 70 is the latest you would want to claim.

Sometimes claiming early is fine, depending on your circumstances. And there’s no shame or one-size-fits-all answer here. What’s most important is that you make the best choice for you and your loved ones.

Social Security bridging, which involves delayed claiming, could be helpful in several ways. For example, you might:

  • Maximize your retirement income
  • Reduce risk over the long term
  • Open the door to tax strategies
  • Help improve things for a surviving spouse
  • And more

Continue reading below, or watch this video with similar information:


This strategy might be right for somebody who retires before age 70 and still has bills to pay. But where do you get the cash flow to keep covering expenses?

Let’s answer that with a bridging strategy in mind. This is something you can design on your own, and there’s some talk of building features like this into 401(k) plans.

I find that most clients want to lean on this strategy to some degree. But it doesn’t have to be all-or-nothing, and some people only delay for a year or two.

What Is a Bridging Strategy?

Here’s the ultrashort explanation of a Social Security bridge strategy: You delay taking your retirement benefit after you stop working. While you wait, you spend from your savings, including IRAs, 401(k) or 403(b) accounts, and other resources.

The assumption is that you withdraw the same amount you would receive in Social Security benefits at your retirement age, but you can withdraw and spend any amount you choose.

Example:

  1. You retire at age 62, when your Social Security benefit would be $1,465 per month.
  2. You withdraw $1,465 per month from your retirement savings instead of claiming Social Security early.
  3. You might need to withdraw extra for an after-tax adjustment.
  4. Your Social Security retirement benefit increases yearly (due to a higher age and inflation adjustments).
  5. At age 70, you claim Social Security benefits.
  6. Your monthly benefit at age 70 is $2,634 (or more), allowing you to reduce withdrawals from retirement savings.

When you delay claiming your retirement benefit, your monthly income stands to increase.

  • When you’re at your full retirement age (FRA) or later, that increase amounts to up to 8% per year.
  • When you’re below FRA, you still get modest increases—ultimately ending up with more income later in life.
  • There could also be inflation adjustments with additional increases.

Why It’s Important

Social Security income is unique and often underestimated as an important part of your retirement plan.

You get income that is government guaranteed, inflation adjusted, and based on life expectancy tables that might reflect worse health than your own. And that window of time with no Social Security income could offer opportunities to reduce your taxable income in future years.

But nothing is perfect, so let’s review the pros and cons of using a Social Security bridging strategy. Keep in mind that you don’t have to go all-or-none. Maybe you delay for a few years instead of waiting until age 70. Maybe you go all the way to 70. It’s up to you.

Bigger Payments

The older you get, the bigger your monthly payment. Social Security allows you to claim as early as age 62, but doing so reduces the amount you receive. For instance, if your FRA is 67, you’d get only 70% of your FRA amount if you claim at 62. For every $1,000 of benefit, you’d only get $700. That reduction lasts for your entire life.

But if you delay claiming, your benefit increases. Again, assuming an FRA of 67, waiting until age 70 means you could get 132% of your age 67 benefit.

Reduce Market Risk in Later Years

Conventional wisdom says that long-term investing helps to manage risk and carries less risk than short-term thinking. There’s some truth to that. Still, it can be helpful to reduce your long-term risk when possible. In this case, we’re talking about reducing your reliance on investment returns in your old age.

While we might expect markets to rise in the future (mostly—with inevitable crashes and pauses along the way), there’s no guarantee that that will happen. By making Social Security a bigger piece of your future income (and less of today’s income), you might be able to reduce your risk exposure in retirement.

Enable Tax Strategies

You might have a low taxable income for several years if you use a Social Security bridge. After you stop working—but before you begin taking benefits—you have the opportunity to get strategic.

Important: Smart tax planning can potentially reduce your future required minimum distributions (RMDs), which can help to avoid tax problems in your 70s and beyond.

A few options include:

  • Fill brackets: If you’re spending money, consider spending from pre-tax accounts first to fill up to a tax bracket that is acceptable to you. You can just reinvest in a brokerage account if you don’t need the money.
  • Roth conversions: Intentionally pay taxes on pre-tax money (ideally at low rates) to convert it to tax-free income later in life.
  • Manage health coverage costs: If you’re buying your own health coverage, keeping your income low might make sense. That way, you could qualify for tax credits that keep monthly premiums low.

Ultimately, these tax strategies can have conflicting goals, so you need to find the balance. In some cases, you’re increasing your income. In other cases, you want to minimize your income.

As a bonus, by managing your taxable income later in life, you might reduce the amount of tax you pay on Social Security benefits.

Provide for a Spouse

A surviving spouse can receive the higher of their own Social Security benefit or the biggest benefit their deceased spouse was eligible for. That’s helpful when your benefit makes up a significant portion of the household income—and when your benefit is bigger than your spouse’s.

By waiting as long as possible, you not only secure income for yourself, but you also improve the chances of your surviving spouse getting as much as possible after your death. Remember that the household will only have one Social Security payment coming in, and the spouse will likely shift to a single tax filing bracket.

Plus, if you and your spouse have similar ages and you’ll rely on spousal benefits, waiting to claim can potentially help ensure you maximize those spousal benefits. Be sure to explore several claiming strategies for married couples as you develop your plan.

Inflation Protection

Inflation can derail a retirement plan. It’s always possible to run out of money, especially if you’ll need to take increasingly large withdrawals from your savings over the years. But Social Security’s inflation adjustments can help mitigate (but not eliminate) the risk of high inflation.

Most private annuities don’t offer inflation adjustments. When they do, they might be limited or expensive. But Social Security retirement benefits are adjusted for inflation, helping you keep up with the rising cost of goods and services in retirement. Some pensions have a cost of living adjustment (COLA). But pensions are increasingly rare, and Social Security makes up a significant portion of retirement income for most people.

Potential Drawbacks

No strategy is perfect, and it’s important to explore some potential pitfalls. Just a few examples are below.

Less in Cash and Investments

You might enjoy the peace of mind that comes with large account balances. Spending down your assets during the bridge years can be scary, and you’ll withdraw at a relatively high rate. However, the rate should decrease substantially after your Social Security income starts.

Longevity Concerns

A bridge might make the most sense if you expect to live a long life—into your 80s and beyond, for example. If you have known health issues that will limit your lifespan, claiming benefits earlier might be appropriate.

Investment Returns

While planning to get high returns is problematic, you might believe you can outperform by investing. If that’s the case, it could make sense to leave assets invested for growth. But be sure to consider the possibility that investments won’t perform as you expect.

Legacy Goals

Spending down your assets can seem counterintuitive if you want to leave a substantial amount to loved ones or charity. On the one hand, your account balances will dwindle in the near term, and they might not recover. But it’s possible that smaller withdrawals later in life could help to preserve assets. Ultimately, it depends on how things unfold.

Tips for Bridging

If you like the idea of using a bridge, start thinking about steps to improve your chances of success.

First, plan for any years when you’ll have a low income, and consider Roth conversions, tax gain harvesting, or extra withdrawals in those years.

Next, consider how you’ll access your money during the bridge years. Think about which accounts you’ll use, and make sure the funds will be accessible when you need the money. Also, review which investments you’re currently using. Are those still the right vehicles for taking income (possibly soon)?

Finally, make a plan to see how all of this will work. By running some numbers, you can estimate if you’ll deplete your savings by too much. That exercise might help you choose the right age for taking benefits. This free early retirement calculator helps you model a Social Security bridge strategy.