A recent analysis from the Bipartisan Policy Center explores the virtues of Social Security “bridge” strategies, drawing on insights from Jason Fichtner, its former chief economist and longtime contributor.
Many retirees could improve their protection against living longer than expected via bridge strategies, the findings suggest. In these approaches, retirees delay claiming their Social Security benefits by using other sources of wealth to help cover their expenses. One option is to spend down 401(k) assets, while other retirees may purchase income annuities or draw on an inheritance.
Whatever the specific strategy, waiting to claim this way can increase the maximum monthly benefit by nearly $2,200 (for 2025) if a client waits until the maximum benefit claiming age of 70 rather than claiming at 62. Even if a client can wait to 65 or 67 to claim, the benefit increase is also substantial.
Beyond tackling longevity risk, retirees with the means to use a bridge strategy can also meaningfully raise their standard of living without increasing their chance of insolvency in retirement. This is because maximizing Social Security income allows beneficiaries to spend more comfortably — and potentially take more investment risk with remaining liquid wealth — knowing that they will have the income to meet their basic spending needs.
Bridging further protects against future expense shocks by maximizing a retiree’s baseline inflation-protected income, according to the report, thanks to Social Security’s annual cost-of-living adjustment being hard-coded into the benefit formula.
Overall, the report suggests, those who use a bridge strategy need to start retirement with less in assets than they would otherwise and can spend more than they could spend with the same level of assets without a bridge.
Behavioral Challenges
Delaying claiming Social Security benefits, as the report details, is a powerful strategy that many Americans could use to maximize financial wellness in the face of significant uncertainty and risk. Delaying, however, comes with costs and is not well understood by the general public, leading to behavioral challenges that must be addressed by advisors recommending the strategy.
“A person must either continue working until claiming or use other assets, such as those accumulated in a 401(k), to cover their living expenses before claiming,” the report notes. “They can do so either by purchasing an annuity or spending down their other retirement assets to create the ‘bridge’ from retirement to claiming.”
The latter option is underappreciated and underused, according to the report, likely because of misconceptions about how much money a bridge strategy requires and how large a return it yields over a lifetime.
Running the Numbers
To clarify the wealth needed, the report considers a hypothetical medium earner — someone who earned an average of $66,223 annually (adjusted for inflation) for at least 35 years. The average monthly earnings during their working years, indexed for inflation, would be $5,519.
“Assuming a generous target income replacement rate in retirement of 80%, this person needs monthly income of $4,415,” the report details. “Claiming Social Security old age benefits at age 62 nets only $1,734 per month, leaving a gap of $2,681 per month for life. But waiting to claim until the FRA of 67 nets a monthly benefit of $2,477, leaving a much smaller gap of $1,938 per month. Waiting until 70 reduces that gap even further, to $1,343.”
From there, the report demonstrates how the hypothetical medium earner who retires at age 62 could use a bridge strategy to increase their lifetime monthly benefit amount.
“Instead of claiming Social Security upon retirement, this person draws an additional $1,734 per month from their retirement savings to replace their age-62 benefit,” the report states. “At 67 (full retirement age), the individual claims Social Security, securing monthly inflation-protected benefits of $2,477.”
Funding the bridge required $104,035, and while this may seem like a significant amount of “depleted wealth,” the retiree will recoup the expense through increased Social Security benefits in less than 12 years.
“A substantial body of literature shows that many retirees could improve not only their protection against living longer than expected but also their standard of living by using a bridge strategy,” the report emphasizes.
The Bottom Line
The decision when to claim Social Security benefits, of course, is one of the most consequential financial choices that Americans face.
“By delaying, individuals can substantially increase their monthly Social Security benefits, enhance their protection against longevity risk, and mitigate the financial uncertainties inherent in retirement,” the authors emphasize. “This includes market volatility and macroeconomic shocks.”
Suboptimal claiming decisions remain prevalent, however, due to psychological biases, a lack of “longevity literacy,” and structural barriers within the financial industry and public policy.
“For many retirees, a bridge strategy can facilitate delayed claiming and lead to greater lifetime wealth, increased spending potential, and enhanced financial security,” the report adds. “But the decision to implement a bridge strategy is complex and requires careful consideration of individual circumstances, risk tolerance, and financial resources. Financial professionals and policymakers must work together to overcome the barriers that prevent wider adoption of bridge strategies.”
The paper proposes a series of recommendations for the financial industry and policymakers. These include enhancing the flexibility of protected income products, providing education and clarity on product offerings and strategies, and integrating Social Security claiming optimization tools into retirement plans.
Further, the report argues, financial professionals should reframe the Social Security claiming decision away from the “breakeven analysis” and focus on the program’s value as longevity insurance. They should also work to improve clients’ understanding of their life expectancy.
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