Retirees who delay Social Security until age 70 can use a "bridge" strategy to cover the gap years by spending down cash savings first. This approach lets Social Security benefits grow larger, since waiting until 70 produces bigger monthly checks for life compared to claiming earlier.
The strategy works best for people with good health, family longevity, and enough savings to cover near-term expenses without tapping investments. Social Security adjusts for inflation annually, so higher delayed benefits can provide greater purchasing power in later years.
The bridge strategy may not work if you have very little savings, health concerns, high-interest debt, or an immediate income need. For married couples, the higher earner may benefit most from waiting until 70 to secure a larger survivor benefit for the lower-earning spouse.
The withdrawal order from your retirement accounts matters for taxes. Spending cash first rather than withdrawing from traditional IRAs or 401(k)s can reduce your tax bill during the bridge years. However, letting a traditional retirement plan grow too large can result in high required minimum distributions (RMDs) at age 75 for people born in 1960 or later. Roth IRA withdrawals are tax-free, so holding off on those withdrawals may make sense if you expect higher income later from Social Security and 401(k) withdrawals.
Avoid draining your emergency savings completely when using this strategy, since unexpected costs like home repairs could leave you vulnerable. The optimal withdrawal order depends on your age, account types, taxes, health, and spending needs. Working with a financial advisor can help you map out the right strategy.