Boost Your Social Security Benefits in Retirement With This ‘Bridge’ Strategy

More than a third of retirees claim their benefits early. According to the Center for Retirement Research at Boston College (CRR), 33% of men and 35% of women claimed before age 64. While everyone’s reasons for claiming are different, the Americans who can wait beyond full retirement age (FRA) will see larger Social Security payments when the time comes to collect. In order to get there, many will use what’s called the “bridge strategy.”

A financial advisor can build you a roadmap for retirement that makes the most of your investment portfolio.  

The Social Security ‘Bridge’ Strategy Definition

The bridge strategy is a method for locking in higher lifetime Social Security benefits by using 401(k) assets as a stopgap. Instead of claiming Social Security immediately after leaving the workforce, a new retiree uses their 401(k) assets or other savings as a substitute for Social Security until age 70 when they can claim their largest possible benefit.

Delaying Social Security until the maximum claiming age (70) can increase a retiree’s benefits by 76% compared to claiming at age 62, according to Alica H. Munnell and Gal Wettstein of the CRR. That’s because benefits increase by as much as 8% for every year they are delayed until age 70. On the flip side, claiming Social Security before reaching FRA reduces  your monthly benefit.

The bridge strategy capitalizes on this incentive and creates a larger stream of annuitized income.

“Using their 401(k) assets as a substitute for Social Security benefits when they retire – as a ‘bridge’ to delayed claiming – would allow participants, in essence, to buy a higher Social Security benefit,” Munnell and Wettstein wrote. ¹ “The potential for enhancing annuity income through Social Security is substantial, since the majority of retirees claim before their FRA and about 95 percent claim before age 70.”

And unlike a traditional annuity, Social Security benefits are adjusted annually for inflation to preserve a beneficiary’s purchasing power. Then again, a Social Security bridge may not be beneficial for people with shorter life expectancies. It will also reduce a person’s nest egg earlier in retirement and may diminish or completely deplete the inheritance they plan to leave for loved ones.

How the Social Security Bridge Works in Practice

A Social Security bridge fills the income gap between retirement and your first monthly benefit check. Instead of claiming benefits at 62 or full retirement age, a retiree draws from a 401(k), IRA, or other savings accounts for income. This allows Social Security benefits to grow through delayed retirement credits until age 70, when monthly payments reach their maximum level.

For example, consider a worker in 2026 who retires at 65 and is eligible for the maximum $4,152 monthly benefit at full retirement age. If that worker claims at 62, the benefit would drop to roughly $2,969 per month. By waiting until 70, the monthly benefit would rise to about $5,181. The bridge strategy replaces those foregone Social Security payments with withdrawals from retirement savings during the five-year gap.

During the bridge period, the retiree withdraws an amount roughly equal to the Social Security benefit they would have received. Using the example above, that could mean withdrawing about $12,000 per year from a 401(k) between ages 65 and 70. These withdrawals reduce the account balance earlier in retirement but shift more income into a guaranteed, lifetime benefit later on.

Once Social Security begins at 70, this maximum Social Security benefit continues for life and adjusts annually for inflation. Over time, the larger benefit can offset the earlier portfolio withdrawals, particularly for retirees who live into their late 70s or beyond. The exact break-even point depends on life expectancy, investment returns, and withdrawal amounts during the bridge years.

This approach changes the structure of retirement income rather than increasing total assets. The trade-off involves lower account balances in the early years in exchange for higher guaranteed income later. For retirees focused on maximizing lifetime Social Security benefits and reducing reliance on market-based withdrawals in advanced age, the bridge strategy reframes when and how retirement savings are used.

Annuities vs. Social Security Bridge

An annuity is a contract you sign with an insurance company, whereby you pay a lump sum or make periodic payments in exchange for guaranteed payments at a later date. Although they are often considered expensive and complex, annuities can provide peace of mind to retirees who are worried they may outlive their savings.

“Although annuities would ensure higher levels of lifetime income, reduce the likelihood that people will outlive their resources, and alleviate some of the anxiety associated with most retirement investing, the market for annuity products is miniscule,” Munnell and Wettstein wrote, adding that academics have argued for decades that using retirement assets to purchase an annuity can mitigate longevity risk.

But the researchers noted that people are reluctant to exchange the 401(k) balances they’ve spent decades accumulating for a future income stream.

“Moreover, they often do not appreciate the insurance that annuities provide against running out of income, and tend to view the low expected returns associated with this service within an investment framework … The complexity of annuities and consumer distrust of insurance companies further reinforce biases against buying them as investments.”

Instead of using 401(k) assets to buy an annuity from an insurance company, the Social Security bridge strategy pays the retiree an amount equal to the Security benefits they would have claimed at retirement. By delaying Social Security until age 70, the retiree maximizes their eventual benefits and creates a larger stream of annuitized income.

Also, unlike payments from annuities, Social Security benefits are adjusted annually for inflation, which helps retirees protect their purchasing power.

“Purchasing additional Social Security income does not involve handing over accumulated assets to an insurance company, provides a familiar form of lifetime income that is adjusted for inflation, and does not expose the purchaser to higher costs from adverse selection,” Munnell and Wettstein wrote.

Should You Use the Bridge Strategy?

To gauge this strategy, the Center for Retirement Research conducted an online survey that asked participants whether they would use an employer “bridge” plan that would automatically pay them an amount equal to their Social Security benefits from their 401(k) balance when they retire.

The survey, which was administered by the Nonpartisan and Objective Research Organization at the University of Chicago, polled 1,349 workers between the ages of 50 and 65 with at least $25,000 in their 401(k) accounts.

Researchers learned that despite the novelty of the strategy, a “substantial minority” of respondents said they would use the bridge. In fact, nearly 27% of participants who were given only a limited description of the concept said they would use it if offered by their employer.

The more information respondents were given about the Social Security bridge strategy, the most interested they were in using it as a retirement strategy. Almost 33% reported a similar interest when the bridge option was framed as insurance with both its pros and cons explicitly explained. Thirty-five percent of the respondents who were given a thorough explanation of the mechanics of the bridge option said they would use it if offered the chance.

Meanwhile, over 31% of respondents said they would not opt out of the bridge option if it was their employer’s default offering.

“The results show that a substantial minority would be interested in the bridge option,” Munnell and Wettstein wrote. “Furthermore, individuals presented with the pros and cons of annuitization versus investment chose to allocate a small but meaningfully larger share of their assets to the bridge strategy.”

“More strikingly, those defaulted into the bridge option ended up allocating much more of their assets to the bridge,” they added.

Bottom Line

Many Americans are using the Social Security bridge as a method for delaying Social Security benefits until age 70 to enhance their future payments. To do this, a well-funded 401(k) is essential. A financial advisor can help you develop this strategy as well as answer any other questions you have about retirement planning.

Retirement Planning Tips

• The 4% Rule is perhaps the most well-known rule of thumb when it comes to retirement planning. The strategy dictates that a retiree can withdraw 4% of their savings in the first year of retirement (adjusting subsequent withdrawals for inflation) and have enough money to last 30 years. However, researchers recently found the 4% Rule may be outdated. New research suggests that retirees following a fixed withdrawal strategy should only take out 3.3% of their savings in the first year.
• A financial advisor can help you plan for retirement and devise a withdrawal strategy that meets your needs. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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