More workers need to be informed that a Social Security bridge option can reduce Social Security early-claiming penalties, according to a recent report by the Schwartz Center for Economic Policy Analysis, or SCEPA. The resulting higher benefits could help them pay for long-term care in the future.

“A formalized, well-promoted, accessible and easy-to-understand Social Security Bridge option could help workers delay their claims and thereby secure higher lifetime benefits and greater economic stability in old age,” CEPA Director Teresa Ghilarducci, a labor economist, wrote Thursday in an online post. 

SCEPA noted that Americans can start collecting Social Security at age 62 but see reduced monthly benefits if they claim Social Security benefits before age 70. More than 60% of eligible Americans claim benefits before age 70, however.

The bridge option, Ghilarducci said, allows people to delay tapping into Social Security by covering living expenses through withdrawals from retirement savings. By delaying filing for Social Security, retirees can increase their eventual Social Security retirement benefits and their spouses’ possible survivor benefits.

“While this bridge is not relevant for the financial fragility of all retirees in the US, it provides an important mechanism for millions of Americans to optimize their Social Security benefits — helping to ensure a sustainable income during their retirement and freeing them and their spouses from the common and harmful worry of outliving their retirement savings,” Ghilarducci said.

A formalized Social Security bridge, she noted, generally calls for individuals to spend down their retirement accounts, such as 401(k)s, before turning to Social Security.

“These retired workers would withdraw funds roughly equal to their monthly Social Security benefit to delay their Social Security claims while maintaining a relatively smooth level of consumption. In essence, the worker is using their retirement savings to buy a higher lifetime income stream as Social Security payments are guaranteed through the end of the worker’s and their spouse’s lives,” Ghilarducci said.

“This strategy mitigates the risk that workers and their spouses outlive their accumulated retirement savings,” she added.

Of course, use of a formalized Social Security bridge option depends on people’s access to retirement savings, Ghilarducci noted. Therefore, SCEPA is advocating for broader policy reforms, including expanding access to tax-advantaged retirement savings accounts “and revitalizing special minimum benefits within the Social Security framework.”

SCEPA also is calling on the Social Security Administration to increase awareness of the benefits of delaying collecting benefits, for example. At the same time, the agency could encourage retirees to draw more heavily on their retirement savings if they can, SCEPA said.

Another option, according to SCEPA, is for employer-sponsored retirement accounts to incorporate bridge payments.

A workplace 401(k)-type plan could default a portion of a worker’s retirement savings to bridge to a higher Social Security benefit, according to the experts.

Yet another alternative, according to SCEPA, would be for the government to establish a separate retirement account held by Social Security specifically for bridging that workers could contribute to