One of the most important financial decisions you’ll make in your 60s is when to claim Social Security. Claim at 62 and you’ll receive benefits for more years, but at a permanently reduced amount. Wait until 70 and you’ll receive 77% more per month for the rest of your life.
The math seems straightforward, but the emotional reality is harder. Watching your savings decline while you wait for a larger benefit feels uncomfortable. Many people claim early simply because they can’t stomach drawing down their retirement accounts.
There’s a better approach. The Social Security bridge strategy uses your retirement savings strategically during your 60s to fund a delay in claiming benefits. For many retirees, especially those who live into their 80s and beyond, this strategy can add hundreds of thousands of dollars to lifetime income.
At MJT & Associates, we help clients model this decision carefully, accounting for taxes, other income sources, and individual circumstances. Here’s how the bridge strategy works and when it makes sense for your situation.
Understanding Social Security’s Claiming Rules
Before diving into the bridge strategy, you need to understand how Social Security benefit amounts change based on when you claim.
You can start claiming Social Security retirement benefits as early as age 62. However, claiming before your full retirement age results in permanently reduced benefits. Your full retirement age depends on your birth year. For most people currently approaching retirement, it’s between 66 and 67.
If you were born in 1960 or later, your full retirement age is 67. Claiming at 62 means accepting a 30% permanent reduction in your monthly benefit. That reduction lasts for your entire retirement, not just until you reach full retirement age.
The real opportunity comes from delaying benefits past full retirement age. For each year you delay claiming between full retirement age and 70, your benefit increases by 8% per year. These are called delayed retirement credits. If your full retirement age is 67 and you wait until 70, your monthly benefit will be 24% higher than your full retirement age amount.
Combined with the reduction for claiming early, the difference between claiming at 62 versus 70 is dramatic. A person entitled to $3,000 per month at age 67 would receive only $2,100 at 62, but $3,720 at 70. That’s a 77% difference in monthly income.
The question becomes: is it worth depleting your savings to access that higher benefit?
What Is the Social Security Bridge Strategy?
The bridge strategy is straightforward in concept. Rather than claiming Social Security early because you need the income, you draw more heavily from your retirement savings during your 60s. This “bridges” the gap between when you stop working and when you claim Social Security at 70.
Here’s how it works in practice. Suppose you retire at 62 with $800,000 in retirement savings. Your Social Security benefit would be $2,100 per month if claimed immediately, or $3,720 if you wait until 70. You need $5,000 per month to cover your living expenses.
Under the traditional approach, you might claim Social Security at 62, getting $2,100 per month, and withdraw the remaining $2,900 monthly from your retirement accounts. That’s $34,800 per year from your savings.
Under the bridge strategy, you delay claiming Social Security and withdraw the full $5,000 monthly from your retirement accounts during your 60s. That’s $60,000 per year from savings. Yes, you’re drawing down your accounts more quickly in the short term. But at age 70, your Social Security benefit starts at $3,720 per month instead of $2,100. That extra $1,620 per month continues for the rest of your life.
The higher Social Security benefit means you withdraw less from your retirement accounts after age 70. Over a typical retirement lasting into your 80s or 90s, research shows you’ll usually end up with more assets using the bridge strategy than claiming early, assuming you live to average life expectancy or beyond.
The bridge strategy essentially trades short-term account depletion for long-term income security.
The Math Behind the Bridge Strategy
Understanding the numbers helps clarify why this strategy often makes financial sense.
Let’s use realistic figures. Assume you’re 62 with $1 million in retirement savings. Your Social Security benefit is $2,500 per month at 62 or $4,425 per month at 70. You need $6,000 monthly for expenses.
Scenario 1: Claim at 62
- Social Security: $2,500/month ($30,000/year)
- Withdrawal from savings: $3,500/month ($42,000/year)
- By age 70, you’ve withdrawn approximately $336,000 from savings
- From 70 onward, you still need $1,500/month from savings ($18,000/year) since Social Security doesn’t cover all expenses
Scenario 2: Bridge Strategy (Claim at 70)
- Ages 62-70: Withdrawal from savings: $6,000/month ($72,000/year)
- By age 70, you’ve withdrawn approximately $576,000 from savings
- At 70, Social Security starts at $4,425/month ($53,100/year)
- From 70 onward, you need only $1,575/month from savings ($18,900/year)
At first glance, Scenario 1 looks better because you’ve preserved more savings by age 70. But here’s what happens over time.
The key is that Scenario 2 provides $1,925 more per month in Social Security income starting at 70. That’s $23,100 more per year in inflation-adjusted, guaranteed income. If you live to 85, that’s an additional $346,500 in Social Security benefits. Even accounting for the extra $240,000 you withdrew during the bridge period, you come out significantly ahead.
Moreover, because Social Security benefits are taxed more favorably than IRA distributions (at most 85% of Social Security is taxable, and many people pay taxes on much less), the after-tax advantage of the bridge strategy is even more pronounced.
Research from the Bipartisan Policy Center confirms this finding. For people who live to average life expectancy or beyond, using assets to delay Social Security claiming results in more wealth preservation than claiming early.
Tax Advantages of the Bridge Strategy
One often-overlooked benefit of the bridge strategy is the favorable tax treatment.
When you withdraw from traditional IRAs and 401(k)s, every dollar is taxed as ordinary income. If you’re in the 22% federal bracket, a $50,000 withdrawal costs you $11,000 in federal taxes alone.
Social Security benefits receive preferential tax treatment. Depending on your income, anywhere from 0% to 85% of your benefits are taxable. Many retirees pay taxes on only 50% or even 0% of their Social Security income, especially if they manage their other income sources carefully.
This creates a tax arbitrage opportunity. During your bridge years (ages 62-70), you pay full ordinary income tax on larger IRA withdrawals. But starting at 70, you receive much more income from Social Security with better tax treatment and withdraw less from IRAs.
There’s an additional tax planning opportunity here. The bridge years, when you’re taking larger IRA distributions, can be ideal years for Roth conversions. You’re already in a higher tax bracket due to larger withdrawals, and you don’t have Social Security income yet to push you into even higher brackets.
After you start claiming Social Security at 70, your IRA withdrawals drop significantly, potentially moving you to a lower bracket. You’ll be glad you did Roth conversions during the bridge years when your effective tax rate made conversions advantageous.
We explore this strategy in depth in “Is a Roth Conversion Right for You?” and show how coordinating Social Security timing with Roth conversions can save substantial taxes over your lifetime.
When the Bridge Strategy Makes Sense
The bridge strategy isn’t right for everyone. Here are the situations where it makes the most sense.
You’re in good health with family longevity. The bridge strategy pays off when you live long enough to collect the higher benefit for many years. If both your parents lived into their 90s and you’re in excellent health, the strategy becomes very attractive. Life expectancy for someone who reaches 65 is now 84 for men and 87 for women, and many people live considerably longer.
You have adequate retirement savings. You need sufficient assets to fund the bridge period. As a general rule, if you have at least 15 to 20 times your annual expenses in retirement savings (not counting your home), the bridge strategy is feasible. For someone needing $60,000 annually, that means $900,000 to $1.2 million in investable assets.
You’re retiring early or your spouse is younger. If you retire at 55 or 60, you have more years to bridge before claiming at 70. This makes the strategy more complex but potentially more valuable. Similarly, if you have a younger spouse who could be collecting survivor benefits for decades, maximizing your benefit becomes even more important.
You want to maximize survivor benefits. When you die, your spouse receives the higher of their own benefit or your benefit. If you delay claiming and maximize your benefit, you’re also maximizing the survivor benefit your spouse will receive for the rest of their life. This is especially important if you were the higher earner.
You sold a business or received a windfall. For entrepreneurs who recently sold their business, you may have the liquid assets needed to fund a bridge strategy comfortably. The sale proceeds can support your lifestyle while you delay claiming, resulting in significantly higher lifetime income from Social Security.
This scenario is common among our clients, and we address the full range of post-sale financial planning in “The Entrepreneur’s Exit Plan: How to Retire from Your Business on Your Terms.”
When You Should Claim Earlier
There are also clear situations where claiming earlier makes more sense than employing a bridge strategy.
You have serious health issues. If you have a condition that significantly reduces your life expectancy below average, claiming earlier allows you to maximize total benefits received over your shorter retirement. The break-even point for delaying from 62 to 70 is typically somewhere in your late 70s to early 80s. If you’re unlikely to reach that age, claim earlier.
You have insufficient assets for a bridge. If your retirement savings are modest and you need Social Security income to cover basic living expenses, you may not have the luxury of waiting. Claiming at 62 or full retirement age becomes necessary rather than optional.
Your spouse has their own substantial benefit. If both spouses have worked and earned similar amounts, the survivor benefit advantage becomes less important. You might choose to have one spouse claim early while the other delays, creating a diversified claiming strategy.
You face job loss and can’t find work. If you lose your job in your early 60s and despite your best efforts cannot find employment, claiming Social Security may be necessary to bridge the gap to Medicare at 65 and provide essential income.
You’re recently divorced. After divorce, claiming decisions become more complex. You may be eligible for benefits based on your ex-spouse’s record if you were married at least 10 years. Understanding these rules and coordinating your claiming strategy with your divorce settlement is essential.
We address many of these considerations in “Gray Divorce: 5 Financial & Tax Considerations for Couples Over 50.“
Coordinating the Bridge Strategy with Other Retirement Decisions
The bridge strategy doesn’t exist in isolation. It must coordinate with several other important retirement planning decisions.
Healthcare coverage before Medicare. If you retire before 65, you need healthcare coverage until Medicare begins. COBRA coverage from your former employer typically lasts 18 months. After that, you’ll need coverage from the ACA marketplace, a spouse’s plan, or private insurance. Factor these costs into your bridge period expenses.
Required Minimum Distributions. RMDs begin at age 73 for those born in 1951 or later. If you’re using the bridge strategy and reach RMD age before claiming Social Security, your required distributions might push you into higher tax brackets. Plan for this by modeling different scenarios or consider Roth conversions before RMDs begin.
Pension considerations. If you have a pension, understand how the claiming age affects your benefit and how it coordinates with Social Security. Some pensions reduce at certain ages assuming you’ll claim Social Security. Others offer different payout options that might influence your Social Security timing.
Part-time work. Some retirees work part-time during their 60s, either for income or personal fulfillment. If you earn above certain limits before full retirement age while claiming Social Security, your benefits will be reduced temporarily. This is another factor favoring delay. Once you reach full retirement age, earnings no longer affect benefits.
Spousal coordination. If you’re married, your claiming decisions should be coordinated. Often, the higher earner delays to 70 while the lower earner claims earlier. This provides some current income while maximizing the survivor benefit for whoever lives longer.
How to Implement a Bridge Strategy
If you’ve determined the bridge strategy makes sense for your situation, here’s how to implement it effectively.
Step 1: Model your specific situation. Use online calculators or work with a financial advisor to model claiming at different ages. Include your savings, expected returns, taxes, other income sources, and estimated longevity. The Social Security Administration’s website offers helpful tools, though they don’t account for taxes or other assets.
Step 2: Identify which accounts to draw from. Generally, draw from taxable accounts first, then traditional retirement accounts, saving Roth accounts for last. However, your situation might benefit from a different sequence. Tax planning during bridge years is critical.
Step 3: Consider Roth conversions. The bridge years offer a potential window for strategic Roth conversions. You’re already taking larger distributions and paying taxes. Converting additional amounts from traditional to Roth might make sense before Social Security income starts and potentially pushes you into higher brackets.
Step 4: Plan for sequence of returns risk. If you retire right before or during a market downturn, taking large withdrawals from declining accounts can be dangerous. Consider keeping 2-3 years of expenses in cash or short-term bonds to avoid selling stocks at depressed prices. Alternatively, have a plan to reduce spending or generate income if markets decline significantly.
Step 5: Review and adjust. Your bridge strategy isn’t set in stone. If your health changes, markets perform differently than expected, or tax laws change, you can adjust your claiming age. Up until the month you file for benefits, you can change your mind. Even after filing, you have a brief window to withdraw your application.
Step 6: File at the right time. Social Security benefits begin the month after you reach your target age. If you want benefits to start in January after turning 70, file in December. Applications can be filed up to four months before you want benefits to begin. Don’t miss your target date due to processing delays.
Special Considerations for Different Situations
Business Owners and Entrepreneurs
If you’ve sold your business or are planning an exit, the bridge strategy often makes excellent sense. Sale proceeds give you the liquid assets needed to fund the bridge period comfortably. The significantly higher Social Security benefit provides a guaranteed income floor that reduces pressure on your investment portfolio.
Many business owners are accustomed to controlling their income and may feel uncomfortable letting go of immediate Social Security income. However, think of delaying as making an investment with an 8% annual guaranteed return (the delayed retirement credit) that’s also inflation-adjusted and lasts for life. That’s a better return than most fixed income investments offer.
Divorced Individuals
Divorce complicates Social Security planning significantly. If you were married at least 10 years, you may be eligible for benefits based on your ex-spouse’s record. You can claim these benefits as early as 62, and your claiming doesn’t affect your ex-spouse’s benefits or their current spouse’s benefits.
The rules are complex. You can switch between your own benefit and an ex-spousal benefit at different times to maximize lifetime income. This requires careful planning, and a bridge strategy might apply to either or both benefits.
If you’re recently divorced and rebuilding financially, you may not have adequate assets for a bridge strategy. In this case, understanding which benefit to claim and when becomes even more critical. Consider consulting with a Social Security expert as part of your post-divorce financial planning.
Surviving Spouses
If your spouse has passed away and you’re deciding when to claim survivor benefits, the same general principles apply. Survivor benefits can begin as early as 60 (or 50 if you’re disabled), but they’re permanently reduced if claimed before your full retirement age.
You can claim a survivor benefit early and then switch to your own benefit later if it’s higher, or vice versa. This sequential claiming strategy can be valuable, but it requires understanding the complex rules around switching between benefit types.
The Role of Professional Guidance
Given the complexity of Social Security claiming decisions and their interaction with taxes, investments, healthcare, and other retirement income sources, professional guidance often pays for itself many times over.
A comprehensive financial advisor can model different scenarios specific to your situation, accounting for all relevant factors. They can show you the break-even ages, after-tax income, and total lifetime benefits under different claiming strategies.
They can also help you coordinate Social Security timing with Roth conversions, required minimum distributions, healthcare planning, and estate planning. All these pieces work together, and optimizing one without considering the others can lead to suboptimal outcomes.
At MJT & Associates, we take what we call a holistic approach to retirement planning. We don’t just look at Social Security in isolation. We consider how it fits with everything else in your financial life: your savings, your taxes, your estate plan, and your goals.
Frequently Asked Questions
What is the break-even age for delaying Social Security benefits? The break-even age is when the total benefits received from delaying equal the total from claiming early. For delaying from 62 to 70, break-even is typically around age 78 to 82, depending on your specific benefit amounts. However, this simple calculation ignores several important factors: taxes (Social Security is taxed more favorably), inflation protection (Social Security includes annual cost-of-living adjustments), survivor benefits (your spouse may collect for decades), and investment returns on your portfolio (the bridge strategy can actually preserve more wealth long-term). The true “break-even” analysis is more complex than it first appears.
Should I take Social Security at 62 and invest it for better returns? This strategy sounds appealing but rarely works out mathematically. First, delayed retirement credits provide an 8% annual increase that’s guaranteed and inflation-adjusted, which is difficult to beat after-tax in fixed income investments. Second, taking benefits at 62 means a permanent 30% reduction that affects you for life, including cost-of-living adjustments on that lower base. Third, behavioral research shows that people who receive Social Security typically spend it rather than invest it. Finally, the tax treatment of Social Security income is more favorable than investment returns from taxable accounts. Unless you’re exceptionally disciplined and skilled at investing, delaying usually produces better outcomes.
How does the bridge strategy affect my spouse’s survivor benefits? This is one of the bridge strategy’s most powerful advantages. When you die, your surviving spouse receives the higher of their own benefit or yours. By delaying to age 70 and maximizing your benefit, you ensure your spouse receives the highest possible survivor benefit for the rest of their life. If your spouse is younger or in better health than you, this could mean decades of higher income. For a couple where one person was the significantly higher earner, maximizing that person’s benefit through delayed claiming is often the single most important retirement planning decision they’ll make.
Can I change my mind after I start claiming Social Security? You have limited opportunities to change your mind. Within 12 months of first claiming, you can withdraw your application, pay back all benefits received, and reapply later. This option is available only once in your lifetime. After 12 months, you cannot withdraw your application. However, if you’re at full retirement age or older, you can voluntarily suspend your benefits to earn delayed retirement credits, then restart them later at a higher amount. This doesn’t undo the reduction from claiming early, but it allows some correction. The best approach is to plan carefully before claiming to avoid needing these do-over provisions.
What if markets crash right after I retire and I’m using the bridge strategy? This is a real risk called sequence of returns risk. If you retire at 62, plan to delay Social Security until 70, and markets drop 30% in year one, you’ll be withdrawing from a declining portfolio. To protect against this: maintain 2-3 years of expenses in cash or short-term bonds so you’re not forced to sell stocks at depressed prices, consider building flexibility into your spending plan so you can reduce withdrawals temporarily if markets decline severely, have a backup plan such as part-time work or accelerating your Social Security claim if absolutely necessary, or purchase an income annuity to guarantee a portion of your bridge income needs. A good financial plan accounts for this possibility and builds in protections rather than assuming markets will cooperate with your timeline.
Conclusion
The Social Security bridge strategy represents one of the most powerful retirement planning tools available, yet relatively few retirees use it. The emotional difficulty of watching savings decline during your 60s prevents many people from capturing hundreds of thousands of dollars in additional lifetime benefits.
The key to successful implementation is careful planning that accounts for your complete financial picture: your savings, your health, your tax situation, other income sources, and your goals. The bridge strategy isn’t right for everyone, but for those with adequate savings and reasonable health, it often provides the highest lifetime income.
At MJT & Associates, we help clients navigate this complex decision by modeling different scenarios, stress-testing assumptions, and integrating Social Security planning with Roth conversions, tax planning, and estate planning. We’ve seen firsthand how proper Social Security timing can add hundreds of thousands of dollars to a family’s wealth over retirement.
The decision of when to claim Social Security is too important to make based on gut feeling or general rules of thumb. Your situation deserves individual analysis that accounts for all relevant factors.
This article was originally published here and is republished on Wealthtender with permission.
About the Author
Mitchell J. Thompson, CFP®, CDFA®, ChSNC®, AEP®
Family | Fixer | Fiduciary | Advisor | Wealth Manager
Mitchell J. Thompson, CFP®, CDFA®, ChSNC®, AEP®
| MJT & Associates Financial Advisory Group
