wooin many United States of america While it may be tempting to start claiming your benefits after you retire, it can be beneficial to hold off on claiming your retirement benefits for as long as possible.
By waiting until your full retirement age (FRA), you stand to benefit from accumulating a larger amount. While this may not be practical for everyone, there is a way by which you can stop claiming your retirement benefits, while still receiving some kind of financial aid.
social security bridge strategy
The Social Security bridge strategy involves using your 401(k) as a stopgap until age 70, when you are entitled to the maximum retirement payout benefits.
According to the research done by Alyssa H. Munelli And gal wetstein From the Center for Retirement Research at Boston College, a retiree’s benefits between the ages of 62 and 70 can increase by up to 76 percent.
This is because benefits are delayed by up to 8 percent every year.
“Using their 401(k) assets as an alternative to Social Security benefits when they retire — as a ‘bridge’ to late claims — will allow participants to purchase higher Social Security benefits, ” munell And wetstein written in the paper.
“The potential to increase annuity income through Social Security is substantial, as most retirees claim before their FRA and about 95 percent claim before age 70.”
It’s also important to remember that Social Security benefits are adjusted for inflation on an annual basis, which means it would be prudent to make sure you’re receiving the maximum benefit amount.
Generally speaking, there are three types of individuals who should opt for the Social Security Bridge strategy.
Financially healthy retirees who are not entirely dependent on Social Security
Retirees who have good financial assets.
Those who are confident about staying away from interest income from their investments.