NU Online News Service, March 16, 2004, 2:01 p.m. EST – Prudential Financial Inc., Newark, N.J., has applied for a patent for a strategy for combining retirement annuity income with Social Security retirement benefits.[@@]

The new Income Bridge Approach strategy exploits the fact that Social Security pays higher benefits and offers bigger cost-of-living adjustments for beneficiaries who put off collecting benefits.

The Income Bridge Approach strategy helps clients use their 401(k) plan assets and other personal retirement assets to buy “period certain annuities.” The clients can start collecting Social Security when the annuity income stops.

Clients can set up the private annuities so that the income stream will increase steadily until Social Security kicks in, Prudential says.

Many retirees take Social Security early and supplement Social Security income with additional income from private retirement savings. Putting off use of Social Security benefits can reduce annual expenses, lower taxes and increase retirees’ protection against running out of income, Prudential says.

“Under the Income Bridge Approach, greater protection for the spouse’s income is available, because a larger Social Security benefit is often paid to the widow upon the death of a spouse,” Prudential adds.