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How to Maximize Social Security with the “Bridge Strategy”

Author Greg Davis

One of the most critical decisions we make once we decide to retire is decisions related to Social Security. Specifically, when should we take their Social Security monthly benefits?

This post will discuss the Bridge Strategy and how it can help you maximize Social Security. 


Key factors to consider when collecting Social Security

Before we go over what is the Bridge Strategy, let’s go over some key factors to consider when collecting Social Security.


1. Life expectancy

How long will YOU live? 

Now, I know no one has a crystal ball, but we do have a family history and a decent understanding of whether we are super healthy or have a myriad of health issues. Coming from a family with a history of heart disease, I am currently on medication due to meeting two of the three risk factors (high cholesterol, high blood pressure, and smoking) for heart disease. 

Unlike the famous song by Meat Loaf, this is when two out of three is bad. This is certainly relevant information, as you want to maximize your return on investment (ROI) based on what you have paid into Social Security over the working years of your career.


2. Combined Income

If you are currently working, this is something to consider when taking your Social Security benefit. 

There are generally a handful of negative tax implications if you are at a certain age, working, and also taking your Social Security benefit.

A portion of your Social Security retirement benefits (ranging from 50-85%) are subject to federal income tax for most people based on your “Combined income,” though a portion of the benefits are exempt from taxes. “Combined income” includes your adjusted gross income (AGI per your tax return), any nontaxable interest you receive, and half of your Social Security benefits.

This can be a very confusing topic, so I recommend using a tax professional to sort out the details. Some people can reduce the tax impact by delaying the start of Social Security benefits until age 70 and taking income instead from retirement accounts or other savings. We will discuss this “Bridge Strategy” later in this article.

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3. Spouse status

A big deciding factor should be your spousal situation. Not only if you have one or not, but what is their Social Security benefit likely to be? 

Remember, if there is no working history, there is a good chance they will collect their Social Security based on your lifetime earnings and when you take your benefit.

Social Security benefits for spouses are a common source of confusion. A recent survey found that 30% of Americans are unaware that spouses can claim Social Security based on the work record of a partner. The same survey found that almost 50% of Americans are unaware that divorced spouses can still claim Social Security on the work record of their ex-partner.

Here are four things retired couples need to know:

1) Social Security retirement benefits are available to a retired worker’s spouse, even for spouses with no work history. Specifically, spouses can claim Social Security based on the work record of a retired partner, provided the following conditions are satisfied.

  • The spouse must be at least 62 years of age.
  • The partner must be receiving retirement benefits.

2) The spousal benefit will equal one-half (or 50%) of the retired worker’s primary insurance amount (PIA) if the spouse starts Social Security at their full retirement age. There is one point of possible confusion. Retired workers can earn delayed retirement credits that increase their benefits if they claim Social Security after their full retirement age. Spouses cannot earn delayed retirement credits, so there is no advantage to claiming spousal benefits later than FRA.

3) Divorced spouses can still collect Social Security benefits based on the work record of their ex-partner, provided the following conditions are satisfied.

  • The divorced spouse must be at least 62 years of age.
  • The divorced spouse has not remarried.
  • The marriage lasted at least ten years.

4) When spouses file for Social Security, they automatically file for retired-worker and spousal benefits and will receive the larger of the two payments. 


4. Investments and expenses

Another large consideration should be the composition of your investment portfolio and determining your family’s expenses in retirement. Per my budget analysis, I would say my wife and I are spending about 5 percent more than anticipated. As we navigate our new city of Philadelphia, we eat out more often, enjoy lots of nearby shows and concerts, and deal with the highest inflation shortly after our retirement in 2021. 

This review of your investment portfolio and related retirement expenses helps determine the appropriate timing and how long you may be able to wait to collect your Social Security benefits.


Maximizing Social Security with the Bridge Strategy?

Now that we have discussed some of the key factors above, I want to turn our attention to the discussion of an interesting topic I recently read about…the “bridge strategy.” 

Before we discuss this concept further, I want to preface again that this is not a recommendation but a strategy that I feel is worth sharing.

For context, it is important to remember that you can start collecting at age 62, which is considered collecting early. The latest you can collect — or I should say the age at which your benefit will be at its maximum — is age 70. Everyone has their full retirement age (FRA), which is technically the age at which you can collect 100% of your stated benefits (typically 66 or 67). 

If you collect early, you will be collecting roughly 70% of your benefit forever, albeit starting four to five years earlier. Conversely, if you wait until age 70 to collect, you will be receiving 132% of your FRA benefits.

Per a thought-provoking 2022 article on this topic, age sixty-two is the second most popular age to sign up for Social Security at 30 percent. 

However, the rate has declined steadily from 50 percent in 2005. Surprisingly, age sixty-six is the most popular age at 34 percent, as this is the age when people born between 1943 and 1954 are eligible to claim full Social Security benefits at their FRA. 

In the article, Christopher Rhim, who holds the Certified Financial Planner (CFP) designation, states, “When you take it at your full retirement age (FRA), which for a lot of people retiring today is sixty-six, there are no reductions in retirement benefits.” 

The good news is that people are becoming more educated on this confusing Social Security benefit timing issue, resulting in more people waiting for the higher benefit payouts later.

As my retirement approached in 2021 after a rewarding career, my wife, Abby, and I worked with our financial advisor to determine our streams of income in retirement. As 2022 has taught us, inflation can majorly impact our retirement needs. Higher prices combined with greater medical expenses in our older years make it critical to ensure our income and investments can support our longer lives. 

Since I turned sixty-two in December 2021, I needed to decide whether to start collecting Social Security benefits immediately. We discussed this with our advisor to lay the groundwork twelve years ago when I was age fifty. We met regularly to discuss current issues (e.g., debt paydown plan) as well as longer-term issues (e.g., 401(k) plans, Social Security, and other retirement vehicles) to ensure we were well-prepared for retirement. To increase my benefits overall, I chose to delay my Social Security benefits until at least my full retirement age (FRA) at age sixty-six years and ten months, which will occur in 2026.

Since I am a healthy person who enjoys moderate exercise, there is a good chance I will live into my eighties. If I live until age eighty-five, I stand to receive significantly more Social Security benefits than I would by collecting early at age sixty-two. 

The simple math is that every year you wait to take your benefits, they grow an additional 8%, which is an attractive guaranteed return. Here is where the bridge strategy comes into play. Instead of taking Social Security early, which many tend to do, you can instead start to take money out of your IRA/401(k) at the same amount your Social Security benefit would be.

This, in turn, has the same impact on your income as if you were taking Social Security. The benefit here is by doing so, you know your benefit is growing at a guaranteed 8% return year over year (ROI) until you turn it on. The key, of course, is not to take more money than your Social Security benefit. 

Additionally, it would behoove you to pull these funds from more conservative investments within your accounts, as they are much less likely to surpass the annual 8% rate of return needed to eclipse the Social Security growth. Taking withdrawals from tax-deferred accounts early in retirement can also reduce the required minimum distributions (RMDs) that begin at age 73 (per current rules).

This concept is called the “bridge strategy” for maximizing Social Security.  I find it intriguing and can see some circumstances where it would make sense and others where it would not. It is worth sharing as one more idea to consider in the retirement riddle of the optimal time to collect your Social Security.

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20 thoughts on “How to Maximize Social Security with the “Bridge Strategy””

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  3. An important consideration for those who plan to draw SS early and reinvest is to compare apples to apples. The example was assuming retirement and using the bridge to pay current expense to delay SS.

    If you draw SS and reinvest it , you still need a source of income for your living expenses. You either continue working or you will be tapping SS AND savings.

  4. Great discussion on a very important topic. Here is my case, as decisions are made according to individual based cases.
    I retired in 2020 at age 60 , then worked a few locums, but now want to fully enjoy my time and travel a lot.
    This year I decided to take my SS benefits at age 64.
    1. Should I wait until FRA of 67, my calculations showed that the brake even age is 77. That is in the middle of the above numbers for average general and at my age life expectancy (74 and 81, respectively). I am totally fine with this.
    I have seen some patients, and several colleagues, who were taking care of their health, but got hit by devastating diseases and cancers.
    2. My SS benefits cover about one-third of the monthly expenses, the other two-thirds are covered from savings and IRA withdrawals. Since I will try following the 4% rule (yes, I read the pitfalls of this rule) as an annual amount to spend from the retirement portfolio, with the help of the SS benefits, the withdrawal rate goes down to 2.6%. That lives an addition 1.3% in the portfolio to be invested.
    2. Here are the SP 500 total % returns (per Morningstar)
    3-Year 5-Year 10-Year 15-Year
    9.71 13.35 11.00 13.21
    Therefore, a return of 8-10%, as stated already in the comments, is not imaginary, but let’s not open that cane of worms where and how to invest. Furthermore, the statement “your benefit is growing at a guaranteed 8% return year over year” when delaying collecting SS, is misleading. Nothing is guaranteed in life except taxes and death!
    Besides dying before FRA, another issue was already pointed out here – the SS system has a good chance to not keep with the current payments and to reduce the benefits by god knows how much – 10, 20, 30%, pick a number depending on the politicians who will be in power at that time.
    3. The SS benefits decrease my taxes as only up to 85% are taxable.
    4. For the NO-GO years I have a long-term care policy which allows me to pay any caregiver, including a family member.
    What difference will make all the money if I am handicapped or bedridden!?

    I plan to fully enjoy the rest of my life as much as I can while my health allows me to!
    As I always was telling my patients –
    Everyday is a Holiday!
    Life is too short and only one, enjoy it while you can!

  5. If you take SS at full retirement age and invest all in a S&P 500 index fund which has averaged over 7% per year(though not guaranteed as they predict slower growth in the near future), you make up some of the lost 8% growth of benefits by waiting till age 70.
    But if ” Congress” initiates means testing for SS benefits , depending on you situation, you may be wiser to take benefits earlier. And economists predict that SS will hit a deficit in 8 – 10 years , which if that happens there will be a ?20% cut in benefits. Both events are speculative, so factoring all this in makes decisions more difficult.

    • Your comment makes logical sense. Unfortunately, the math is wrong. Social Security payments taken early and immediately reinvested in anything other than a zero risk type of account makes the math wrong. Early payments can only be invested in gauranteed invests with zero moving parts. Time certificates are similar style. The market may temporaially disappear 20% to 40% when time for the dollars to be used. Also missed is the factor of a surviving spouse. They could also get dinged by the early start date and be collartal damage of both an unkind market, early death of a partner, and in almost all cases the money taken early will not get invested in the victicous 7% account. Each SS payor and thier respective family dynamics, plus the availibity of other assets makes each case unique. Your blanket statement may be well thought out for your situation but very wrong advise for 90% od most families.

  6. It surprises me that even the professional wealth management advisors are unaware of the miracle of SS delay compounding. In a recent meeting, ours was astonished when I told him what my projected monthly SS income will be next year at 70. We are doing two things which will help us out down the road. First is delaying SS and the second was to delay my TIAA-CREF a few years.

    Bridge income came from cash savings/bonds for the first few years of retirement which covered our expenses for three of those 5 years, allowing the 401k funds to grow further. Next, a stream of rental income and a couple of other streams which covers our “nut.”

    We did do something the WMAs tell us not to do. I took out a 401(k) loan to pay off the balance of our nearly paid off mortgage. Our plan has an in-plan Roth Rollover (IRR) which permits this loan to be rolled over to the Roth side. The interest rate is higher, but this accrues to our benefit. We pay these off in quarterly installments from taxable accounts replacing the securities sold with in-plan Roth investments. We did pay income tax on the IRR at conversion, and now the only cost is the capital gains taxes which we minimize by selecting lot sales to minimize gains. The plan will be complete next year. By doing this, we effectively used our mortgage interest to pay the conversion tax and will save that when RMD days come calling. This will give us additional flexibility in chosing when to pull taxable and non-taxable retirement earnings.

  7. Hey guys, definitely would recommend delaying as much as possible till 70 years old given people are living longer than actuarial data given medical advances but also we can’t forget that SS adjusts for inflation. Bill Bernstein identifies one of the four horsemen of the financial Apocalypse would be inflation and to have a guaranteed source of inflation adjusted benefits is incredibly huge! finally, even though your later years are the no-go years, there is a huge expense in paying for healthcare as identified by the retirement spending smile data. Would be nice to have a high Social Security benefit Inflation adjusted to pay for these high healthcare expenses later in life.

    • Great advice Rikki Racela as your points are very important on the topic of medical advances (thanks to many of our POF readers!) as well as that Social Security (SS) is an inflation-adjusted benefit. In addition, your message on the importance of covering higher healthcare costs in our “no-go years” is great advice for delaying your SS benefits. Thanks!

  8. I’m married. My wife is older and started her SS at age 66, when I retired. I plan on being an early claimer at age 62 later this year.

    1) re “Bridge Strategy”…not much of a strategy ; its just leaving one potential source of income alone or intact (SS), and using another ie IRAs etc in its place.

    2) rather than framing the SS discussion re age to claim, as “losing” money by not waiting until FRA, I think it could be reframed as getting a “bonus” for those waiting those extra years. Subtle of course, but less of a punitive viewpoint.

    3) I’d rather have the extra SS funds available now in my “Go Go” years, than later in my “No Go” years even if its a greater sum.

    4) readers of this blog are likely financially well off and disciplined. I’d rather have the SS funds in my possession sooner rather than later. As the market returns 8-10 % a year, as does waiting to claim SS later, its a wash. However, I will have the extra cash at my disposal earlier. Yes, I have an advisor/CFP to ensure no rash or silly decisions and to ensure proper investing of the funds.

    5) forgive my for being off a bit as I looked this up a while ago: US male lifespan is ~ 74. Age to breakeven by delaying SS to FRA is ~ 78-80 years old. Therefore, more than half of men who delay taking SS take a hit in total benefits received.

    • Well stated CancerDoc as I tend to agree with all of your points. In my discussions with family & friends who have taken their SS benefits early at age 62, the ability to spend more in their “GoGo” years is the primary reason for taking it early.

      Per a Nov 2023 study by Dr. Brandon Yan of UCSF, your final point is right on target as the average life expectancy is only 73 for U.S. men and 6 years higher at 79 for U.S. women. In addition, Yan notes, “a lot of these drivers of worsening life expectancy in particular for men are preventable causes of death.” His scary summary states “We have a health care system that is very advanced in treating illnesses and advanced disease. But for the most part … it is not very good when it comes to preventative care.” Sadly, these statistics may make me rethink my strategy!

      • You look thin and fit in your photo. You are reading this blog, so as Cancerdoc surmises, you probably are financially comfortable. The average life expectancy numbers you cite comprise a majority of people who are neither healthy agers with excellent diet, exercise, and medical care, nor financially comfortable. Most people in your (our) demographic are going to live well past the life expectancy averages given, and likely past the break-even point for delaying benefits until FRA. And I suspect that most people reading this blog have enough money to spend to take advantage of their “Go-go” years already. I’m a 65 year old psychiatrist still working part time, and I plan to delay taking benefits as long as possible.

        • Thanks Michael as I hope you’re correct that my picture is indicative of my overall health. Your points are very valid as I wish you continued good health with your PT work. I hope you can hold off taking SS benefits until age 70 when you maximize it!

    • If you want to use actuarial data in your decision-making, you need to look at the life expectancy of a 62-year old who’s choosing between taking the benefit early versus delaying.

      The average lifespan of all 62-year old men (including those with cancer, heart disease, and other comorbidities) is another 19 years, or 81 years of age. For women at 62, they get another 22 years, on average, or 84 years total.

      Source: https://www.ssa.gov/oact/STATS/table4c6.html

    • CancerDoc, all replies here, and Greg’s discussion re: “Bridging” are perfect for some, great for some, good for some, and bad for some…
      IMHO, the larger your qualified retirement plan sums (i.e. your eventual RMD’s) the more important it is to use the bridge strategy.
      Whittling down your future RMD’s have significant positive ripple effects: keeping your future tax bracket as low as possible, decreasing those pesky IRMAA’s, keeping capital gains rates as low as possible, etc.
      It really does not matter who controls the Senate, House or Presidency, taxes WILL go up! A guaranteed maximum SS benefit will go even further as (hopefully) only 85% will be taxed as income. And, for those with younger, lesser earning spouses, waiting at least until FRA will give them the largest “paycheck” that is indexed to inflation for the rest of their lives.

    • The breakeven comment in 5. is wrong. I have done untold number but north of 1000 customized calulations for my clients and thier families. The breaken even date is virtually identical regardless the start date. Draw young and get small checks till approx 79 or delay and get larger checks for shorter period of time. There is no opinion in the matter, the acturial mathnatics makes the breakeven point the same. However, if you think your only going to live to age 74, start drawing your SS tommorrow morning.
      Regarding number 4. you need a new advisor as you both are wrong to assume you can do creditable financial planning with growth assumptions 8-10%. You will no money in the NO GO years anyhow

  9. The purported 8% return on deferred social security retirement benefit is really payback of the benefit waived for each year of NOT collecting the benefit for a year. An annuity will cost you about 25 times the benefit in the general market, so effectively, social security deferred benefit is a 4% return, similar to what you get in the open market but without the hassle (and choice) of going in the market for the additional annuity. The 8% increment is reduced by lost benefit to spouse if the spouse can not collect spousal benefit when that benefit is higher than his or her own benefit. To balance considerations, you weigh your need and cost of additional 8% in annuity and your income tax.

    • I like your way of thinking about the 8% annual return on deferred SS benefits. But the fact that it’s a guaranteed return of 8% without the hassle of seeking a similar return in the open market is an advantage.

  10. so many options to skin the retirement funding cat. I know some well respected financial advisors who recommend just keeping it simple with the traditional path, whilst others promote complex withdrawal strategies with Roth conversions to minimize projected taxes, IRMAA surcharges, and maximize end of life asset accumulation.

    • Great point Topher as it can be a bit overwhelming to consider the various array of retirement funding strategies. My best advice is to work closely with your advisor & choose the option that is most comfortable for your situation.

      • Agree- I’ve done projections based on a wide variety of assumptions and strategies, so I’m relatively confident I won’t be disappointed.


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