Why a Social Security Bridge Strategy is a Great Option

Why It Matters:
  • The timing for choosing when to claim Social Security could be the biggest financial decision you make in retirement.
  • Using a Social Security bridge strategy is an effective way to get you to age 70, when you will have maximized your Social Security benefits. 
  • Delaying Social Security benefits increases your overall income for retirement.

Katrin Olson tkc.profilePicture Written by: Katrin Olson | Transamerica
Feb. 05, 2021

5 Min readClock Icon

You have more options than you think when it comes to getting to age 70, which is when you will have maximized your Social Security benefits. By doing so, you can increase the amount of your monthly benefits by 76% more than if you had claimed at age 62.1

Surprisingly, only 5% of men and 7% of women delay their Social Security benefits until the age of 70. In fact, many are doing just the opposite by claiming early — with 35% of men and 40% of women claiming their benefits even before they reach full retirement age, or FRA (either age 66 or 672).3 This phenomenon is often due to a lack of funds or health issues.

One way to get to age 70 without claiming is to continue working. However, if that’s not something you can or want to do, then the best alternative would be to utilize what is called a Social Security bridge strategy.4

What is a Social Security bridge strategy and how do I build one?

A Social Security bridge is a mechanism for helping retirees put off claiming Social Security benefits by having them make regular withdrawals from retirement assets between the day they retire and the day they file for Social Security benefits.1 In other words, the retiree uses part of their retirement savings to temporarily replace the expected earnings they’ll receive once they claim Social Security.3

These retirement, or bridge, assets can be classified as resources, savings, investments, or strategies, which will act as income substitutes until you’re ready to claim Social Security.3

When setting up your Social Security bridge fund, it’s a good idea to invest your funds to avoid stock market risk. To do so, choose investments such as a CD, money market fund, short-term bond fund, or a stable value fund in a 401(k) plan.4

Even one year past your full retirement age makes a difference

While you might not be able to get to 70, getting yourself as close as possible is a significant advantage. If you wait to take your benefits until after your FRA, Social Security will add an 8% delayed retirement credit to your eventual monthly payout each year you hold off.5

Another significant aspect of Social Security benefits is the potential each year for a cost of living adjustment, which helps to ensure that the purchasing power of your benefits isn’t eroded by inflation.6 It also won’t drop if the stock market crashes, and it’s paid for the rest of your life, no matter how long you live.4 So whatever return you receive (e.g., 8%) beyond your FRA will also be factored into your cost of living increase.3

Keep longevity in mind as you plan your future in retirement

Today, a 65-year-old can expect to live another 19 to 21.5 years, on average, according to the Social Security Administration. What's more, the government agency says a third of 65-year-olds will hit age 90, and one in seven will live beyond age 95.7

What this means is that you could be looking at 30+ years in retirement. With this in mind, taking the long view on your retirement planning strategy, particularly around when you claim Social Security, makes a lot of sense.

Who is best suited for taking the Social Security bridge strategy approach?

In a perfect world, everyone would delay their benefits until age 70, but realistically that’s not possible for many retirees. So, who are the best candidates to take advantage of this strategy?

Those who should consider this approach include:

  • Financially sound retirees who don’t rely solely on Social Security benefits
  • People that have solid retirement assets and can afford to live off them
  • Retirees who are confident of living on interest earnings from investments

Preparing for your retirement takes time and planning. As part of that effort, it’s worth considering incorporating a Social Security bridge strategy as an effective way to maximize your Social Security benefits.3 The bottom line is, those who can afford to wait until they turn 70 before claiming Social Security should do so.


Things to Consider:

  • The benefit of a Social Security bridge strategy should be considered during retirement planning.
  • Taking the long view on your retirement years is the best way to go for most people.
  • Even just one year of delaying Social Security benefits past full retirement age will earn you an 8% retirement credit.


1 "Alicia Munnell's Social Security Bridge v. Annuities Income Planning Smackdown," ThinkAdvisor, January 2020

2 “Retirement Benefits,” Social Security Administration, 2020

3 “Everything You Need to Know About Social Security Bridge Payments,” Retirement Planning, June 2020

4 "Boost Your Risk-Protected Retirement Income With A Social Security Bridge Payment," Forbes, May 2020

5 "3 Reasons to Wait Until 70 to Claim Social Security Benefits," Kiplinger, September 2020

6 “Latest Cost-of-Living Adjustment,” Social Security Administration, 2020

7 “How Living Longer Will Impact Your Retirement,” U.S. NEWS & WORLD Report, April 2020


Transamerica Resources, Inc. is an Aegon company and is affiliated with various companies which include, but are not limited to, insurance companies and broker dealers. Transamerica Resources, Inc. does not offer insurance products or securities. The information provided is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, investment, legal, medical or financial advice or guidance. Please consult your personal independent professionals for answers to your specific questions.


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