Using a “Bridge” Strategy to Maximize Social Security Benefits Gaining in Popularity - CRB; Kiplinger
Research from the Center for Retirement Research (CRB) provides insight into a retirement planning strategy that appears to be gaining in favor among future retirees. In a post on kiplinger.com, Senior Retirement Editor Elaine Silvestrini reports that more than a third of the respondents to a CRB survey indicated interest in adopting a “bridge” strategy to delay filing for Social Security benefits. The strategy would use 401(k) assets as an alternative to taking benefit payments in advance of full retirement age or, even better if you can do it, age 70.
Ms. Silvestrini’s article is based in part on CRB research published by Alicia H. Munnell and Gal Wettstein, in which they assessed various options to overcome the perceived reluctance to use annuities to ensure lifetime income streams. The study analyzed receptivity to buying additional annuity income from Social Security by delaying claiming, using other resources to bridge the gap between retirement and the beginning of benefit payments.
Basing her analysis on a mathematical example provided by the Social Security Administration, Ms. Silvestrini demonstrates in her article how a benefit taken at age 62 can be boosted by 77% by deferring until age 70. The simple premise is that, based on current economics, any delay in claiming Social Security benefits likely offers a better return than present markets…all you need is the resources to enable plugging an alternative income source into your financial plan.