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In an unexpected new development, a growing group of Americans in their early 60s is actually postponing the time when they begin their social security claims thereby creating temporary “bridge income” strategies in the meantime to cover the financial need.
The financial advisors are talking about the way this trend is spreading among retirees looking for ways that would help them secure the future and at the same time give a shield against the increasing costs of living, even if they do not yet feel they are ready to work full-time.
Experts have been quoted as saying that they, although no one has noticed it yet, this approach might take a position as the potential dominant method in the retirement planning landscape of 2025 and later.
What Is Bridge Income?
Basically, the idea of bridge income refers to temporary income that is used to “bridge the gap” between the time of your retirement and the period at which you start claiming Social Security — the most optimal age is between 67 and 70.
There are a few different forms it might take:
- 401(k) or IRA withdrawals
- Taxable brokerage accounts
- Part-time consulting or freelance work
- Home equity loans or downsizing proceeds
- Annuities or laddered bond payments
With the help of bridge income, the retirees, in essence, stay away from taking social security benefits early, which will make their future check amounts, permanently, decrease.
Why Americans Are Delaying Benefits in 2025
It really couldn’t be any simpler – more money for longer life.
As soon as one claims social security at the age of 62, the youngest allowable age, they will receive a non-negotiable reduction of up to 30% in the payments received monthly. With each year of waiting, however, the retiree racks up more “delayed retirement credits” which will add about 8% to the annual benefits they receive, until they reach 70.
The fact that the price of goods has stayed at a level of 3% and medical fees have gone up made the elderly realize that it is better to receive a larger monthly benefit and not get the Social Security system earlier. This is especially applicable to single people, women, and families with a long living tradition.
A new survey conducted by Retirement Insight Group revealed that as many as 42% of people in the US between the ages of 60 and 63 are likely to stop receiving Social Security due to the launch of a bridge income strategy. Interestingly, the percentage last year was only a mere 24%.
Old Babes Never Die
Ohio’s John Meyers, who used to work as a marketing executive and is now 63, got retired in January 2025. He, however, did not rely on his Social Security benefit only, a blend of monthly consulting payments and Roth IRA withdrawals being his source of income during his retirement.
“I wouldn’t dream of requesting my Social Security benefit until I am 67 at the very least,” John said emphatically. “I went through so much trouble to get the smallest possible benefit locked in forever just for a few extra dollars right now.”
John came up with a gradual changes plan: he sold his bigger house, cut down his living expenses, and remained retired by spreading 5 years’ worth of income from existing savings over that time. This way past the waiting period, he can keep supporting himself from home without actually taking out any benefit earlier.
Most financial planners admit these are the specific strategies that their customers, which are plenty nowadays, are implement themselves, with little or no traditional counseling and investment assistance.
Who Are the Prospective Users of the Bridge Income Option?
Bridge income is not a feasible solution for everyone, but what is it that makes the bridge the silver bullet for someone? If you:
- Plan to live beyond age 80
- Are not in a hurry to receive full benefits immediately
- Have other savings or part-time income
- Intend to protect your surviving spouse with a larger survivor benefit
Conversely, it could be a bad idea to do so, if you:
- you currently need it
- you have some serious health issues
- another source of income is not available to you
Financial Advisers Offer Support for the Change
“I still get many questions and number one on the list is this: ‘Shall I start Social Security payments now at a reduced rate or wait for a higher amount later ?’” Lisa Hayden, a Florida-based advisor in retired life replied to a question on the topic. “But the good news is that those who understand the concept of delaying the better off with more money in their pocket are a greater number today.”
One of the things this Florida advisor has found to be the most valuable is the personalization of “bridge income plans” as these can be used for all retirees who can now be part of her stock-in-trade products. According to her, this is one of the most effective and practical ways of fighting inflation and long-term portfolio management with longevity.
The Key Is to Postpone the Withdrawal — And to Have a Plan
For a long time, the strategy was to quickly claim Social Security, the earlier the better. Come 2025, this mindset is expected to change.
The upsurge in informed choices, better communication, and financial security prospects among the old has made Americans increasingly inclined to design purposeful strategies to prolong benefits — and income planning that makes good sense, bridging the gap.
Folks who are near to their retirement years, can this be a question for them: Would they be ready to delay their benefits a few years if this implies that they will get a larger award later, provided that they have a plan to cover that period of time?
The question is now loudly responded to and in the most affirmative tone by those who used to answer it ambiguously in the past.
