What Is a Retirement Bridge Account?


A retirement bridge account is your strategy for bridging the gap between retiring and claiming your Social Security benefits. Claiming your benefits too early could lead to missing out on tens of thousands of dollars in lifetime benefits. And, for those retiring earlier than age 62, a retirement bridge account may be a necessity.

Whether you are retiring early or want to hold off on claiming your Social Security until later in life, a bridge account can be your financial lifeline. Here’s a quick overview explaining how you can work a bridge strategy into your retirement plan.

What Is a Retirement Bridge Account?

As mentioned earlier, a retirement bridge account will help you navigate the financial limbo between retiring and claiming Social Security benefits. You may find yourself needing an income bridge if you decide to wait until full retirement age to claim your benefits. Here are a few situations in which a bridge account strategy could come in handy:

  • You have set yourself up to retire earlier than at age 62.
  • You were forced to retire early for a reason out of your control.
  • You are waiting until you are 70 to claim your benefits so you can get the max amount.

Even if you are 62 and are ready for retirement, you might want to wait to claim Social Security. Delaying collection until the allows you to receive 100% of the benefits you are entitled to. Plan to stick it out even longer? Each additional year that you delay taking benefits until age 70 allows your Social Security benefit to accrue even more.

For example, if you want to retire at age 62 but don’t want to claim your Social Security benefits until age 70, a retirement bridge account can ensure you aren’t short on income in the interim.

Now that you understand why you might need a bridge account, we will explain what it is in a tangible, actionable sense.

What Are Your Options for a Retirement Bridge Account?

If you are considering a retirement bridge account, here are a few options:

Let’s look at each of these in a bit more detail.

Withdrawing From Retirement Accounts

Tapping your retirement accounts is one income bridge option. Whether you have a 401(k), Roth IRA, SEP, 403(b), or other accounts, you could use these accounts to hold yourself over.

Keep in mind that each account has different rules around withdrawals, which may come into play if you are retiring before age 62.

Withdrawing from retirement accounts can keep things simple, but you will want to be careful not to run down the balance. In theory, you would want to skim a small percentage off your accrued interest, so as to not touch the principal balance.

Old rules of thumb, like the 4% withdrawal rule, are rapidly changing, especially with changes in equity valuations and interest rates. Market conditions continue to change from the past, when the 4% rule worked well, making the numbers difficult to pencil out.


  • Simple to access.
  • Could take earned interest off the top without touching the principal balance.
  • No penalty if you are the right age.


  • Penalties if you are younger than a certain age.
  • Risk of taking out too much cash and falling short in the future.
  • Changing market conditions make this strategy less optimal.

Using an Annuity Laddering Strategy

This strategy would allow you to utilize annuity contracts to generate income and manage interest rate risks while you wait to collect Social Security.

For example, you could get a short-term annuity, like an immediate annuity, which will pay out over a 5-year period. At the same time, you can allocate other money to a deferred, fixed index annuity. While the income benefits on the deferred annuity grow, you can use the income from your short-term annuity immediately as a bridge to Social Security payouts.

Annuities offer guaranteed streams of income, and this staggered strategy can ensure money comes in while you wait to claim your Social Security. Keep in mind that interest rates are increasing, which could eat into your payout.


  • Managed interest rate risk.
  • Guaranteed income streams.
  • Long-term planning.


  • Interest rates are currently increasing.
  • Takes planning and strategy.
  • Could seem complicated for some.

Using a Bond or CD Ladder

A ladder strategy can be used with bonds or CDs, too. By stacking these financial products, you could build a bridge of income between retirement and claiming Social Security.

Bond laddering is a popular option, as you can purchase a series of bonds that mature at different time periods. CD ladders work much the same way. Keep in mind that you may need to put in more money upfront with this strategy, as CDs are paying low interest earnings overall.


  • Earning interest.
  • Straightforward.
  • More liquidity.


  • Low interest earnings.
  • More money needed upfront.

How a Retirement Bridge Account Helps You Avoid Running Out of Money in Retirement

With each year that you delay taking your Social Security past full retirement age, it grows by 7-8%. According to the Social Security Administration (SSA), waiting until 70 can give you 76% more monthly income than if you took it at 62.

It’s clear that waiting to collect your Social Security can have significant financial benefits. But that doesn’t mean that you have to delay retirement if you don’t want to. A retirement bridge account can hold you over financially while you let your Social Security benefit grow.

With the proper planning, you can build financial ladders or strategically tap into your retirement funds to keep money coming in prior to collecting benefits. This strategic planning can help you maximize your income in retirement without staying at your job longer than you would like.

Is a Retirement Bridge Account Right for You?

This will vary from person to person, and you will need to evaluate your current financial situation, lifestyle, and future goals. If you are just getting started on this retirement bridge journey, or you are on the fence about the necessity of this account, ask yourself some of these questions:

  • When do you want to retire?
  • When are you thinking about claiming Social Security?
  • What does your family history look like health-wise?
  • How is your personal health?
  • How might your expectations for a short or long retirement affect when you take benefits?
  • How long is the window between when you would retire and then claim Social Security?
  • How much have you saved for retirement?
  • How much risk do you currently have in your investments?

Your answers to these questions can help navigate your next steps. If you are still unsure, take some time to discuss with your financial advisor and weigh the pros and cons of a retirement bridge account. They should be able to help you decide if this is the right choice for your situation.

To Sum It Up

A retirement bridge account can help you plan for early retirement or let your Social Security accrue so you can get the biggest benefit payout.

You can create a bridge account by strategically withdrawing from your retirement accounts like 401(k)s and Roth IRAs. You could also utilize bonds, CDs, and annuity laddering strategies to create an income bridge.

Your exact strategy will be determined by your personal situation. However, planning for a financial bridge between retirement and claiming Social Security benefits will serve you well.

Do you need help planning for a retirement bridge account strategy or other options that might make sense for your situation? Or perhaps you want another opinion of your existing retirement plan. For your convenience, many experienced and independent financial professionals are available at SafeMoney.com to assist you with your personal financial goals.

Get started by visiting our “Find a Financial Professional” section, where you can connect with someone directly. Please feel free to request an initial appointment at no obligation if you would like to discuss your goals, concerns, and overall financial situation. Should you need a personal referral, call us at 877.476.9723.

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