Bridge to Social Security
When nearing retirement, another strategy to consider: Use periodic withdrawals from your 401(k) to serve as an income resource—a bridge—until you finally start collecting Social Security benefits.
Underlying the bridge strategy is a key point about Social Security benefits. The longer you wait to start collecting your monthly benefit, the higher the amount of that benefit will be. That means, in effect, you could use the bridge strategy to ensure a higher Social Security benefit later on, says Wettstein.
The following example shows how this bridge might work. Suppose you were born in early 1955 and earned enough money in your working years to start collecting a $3,100 monthly Social Security retirement benefit at 65 years old. If you instead wait until you are 68 years old to start collecting, then your monthly benefit might be closer to $3,800—$700 a month more.
If you need a source of income in the meantime—a way to make up for the money you did not collect from Social Security—you could use your 401(k) or other such account as a bridge, withdrawing money every month.
While this example is intentionally broad, relying on numerous assumptions that may not precisely fit your situation, the bridge option is worth considering.
To discuss this and other options available to you, please contact our Participant Success Center at (800) 394-6807 or retirement.concierage@apadvsiors.com or schedule a one-on-one meeting HERE.
Source: CAPTrust/Broadridge Investor Communication Solutions, Inc.
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