Should I Use My Savings to Delay Collecting Social Security?

Episode 358 – Deciding when to collect Social Security is one of the most important financial decisions you’ll ever make. Make a mistake there and you’ll pay for it—every month for the rest of your life. But what if you want to retire early? That doesn’t mean you also need to collect early. A “bridge” strategy can be an important tool to get you through those years between giving up your job and collecting Social Security. It could make you much better off in the long run.

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Hello, this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, should I use an annuity or my savings to delay collecting Social Security?

So, you’re getting near that age. You want to retire when you reach age 65 and become eligible for Medicare, and you’re almost there. How are you going to finance it? There’s no doubt you’re going to miss having a steady paycheck. Should you file early for your Social Security benefit? That will replace at least some of your lost paycheck.

You’ll need to start by taking a look at some numbers. Let’s say that, according to your statement from the Social Security Administration, your “Primary Insurance Amount,” or the benefit you would get at Full Retirement Age, which is age 67, is $3,000 per month. But if you collect at 65, you’re starting two years early. Your benefit would be permanently reduced to $2,550 before annual cost of living adjustments.[1]

It’s the permanent part that causes concern. If you live to age 85, you’re giving up $450 per month for the 18 years between 67 and 85. On the other hand, if you were to wait until age 70 to collect, you would get $3,720 per month. You’d have to forego the five years of benefits, but your retirement from age 70 on is likely to be a bit more comfortable. And “longevity risk”—in other words, the possibility of outliving your money—is one of the biggest issues people face in retirement. Waiting until 70 helps minimize it.

So, which option is better? It would be an easy choice if you knew exactly how long you’re going to live. But of course, none of us do. If you end up dying at age 71, you would have been better off collecting early. If you end up living well into your eighties, you’ll have more money overall if you choose to wait.

And then there’s the issue of the Social Security Trust Funds. They’re running out of money, and expected to go bankrupt in the year 2034. But that doesn’t mean your payment will disappear. If nothing is done between now and then, all payments will be reduced by approximately 19 percent. [2]

This has caused some people to collect early.[3] But there is a reasonable chance that the people in Washington will “fix” Social Security before any payments are reduced.[4] That’s what they’ve always done in past.[5] No guarantees, of course, but it seems highly unlikely politicians will allow benefits to be dramatically reduced.

So, getting back to our original issue, what if you’ve got a good life expectancy? It would probably be best to wait until age 70 to collect, but you’re planning on retiring at age 65. How are you going to get by for those five years in between, when you no longer have a paycheck, but haven’t started collecting your Social Security?

This is where you may want to look at some sort of “bridge” strategy. Mitigating longevity risk is a good reason to implement a bridge strategy, but there’s more. According to a recent study, if you have the money to implement a bridge strategy, you can also meaningfully raise your standard of living without increasing your chance of running out of money in retirement.[6] The increased monthly Social Security benefit helps provide a dependable stream of income for the recipient which can allow for greater flexibility with remaining savings and investments.

There are several possibilities when it comes to getting through that gap. If you’re worried about no longer having a steady paycheck, one popular option is to purchase an annuity to provide you with the income you need to get you from 65 to 70. It can certainly help alleviate your anxiety.

A single-premium immediate annuity is something that tends to work well with a Social Security bridge strategy.[7] But you need to shop around. And for the purposes of bridging the gap, you can get an annuity with a specific term. A five-year annuity would work well with the example we are using here.

The other main bridging alternative is to use some of your accumulated savings. In a recent study, actuary and retirement specialist Ken Steiner concluded that using accumulated savings for Social Security bridge strategies can work well if:

• You expect to live longer
• You have enough assets that you can fund your bridge payments relatively easily
• You want to bolster what he calls your “floor portfolios,” that is, your less risky investments, and…
• You have other assets which can be invested in more risky places.[8]

In the end, the financial decisions you make in your 60’s are likely to have a huge impact on the rest of your life and deciding when to collect Social Security is one of the most important of those decisions. Make a mistake there and you’ll pay for it every month for the rest of your life.

Like so many other things, deciding when to collect Social Security can be complicated. It’s best to have a skilled and trusted professional by your side to help you avoid any pitfalls. Your Security Mutual Life insurance agent can help. Your Security Mutual Life insurance agent will assemble your team and coordinate with your attorney and tax professional to review your situation and to determine the insurance plan that will best suit your needs and objectives.

[1] Social Security Administration. “Early or Late Retirement?” SSA.gov. https://www.ssa.gov/oact/quickcalc/early_late.html (accessed October 9, 2025).

[2] Social Security Administration. “Social Security Board of Trustees: Projection for Combined Trust Funds One Year Sooner than Last Year.” SSA.gov. https://blog.ssa.gov/social-security-board-of-trustees-projection-for-combined-trust-funds-one-year-sooner-than-last-year/ (accessed October 9, 2025).

[3] Steiner, Ken. “Should Your Clients Use Savings to Defer Social Security?” Advisorperspectives.com. https://www.advisorperspectives.com/articles/2025/08/19/should-clients-use-savings-defer-social-security? (accessed October 8, 2025).

[4] Horsley, Scott. “Social Security benefits face big cuts in 2033, unless Congress acts.” NPR.org. https://www.npr.org/2025/06/18/nx-s1-5436828/social-security-benefits-cut-congress (accessed October 9, 2025).

[5] Social Security Administration. “SUMMARY of P.L. 98-21, (H.R. 1900) Social Security Amendments of 1983-Signed on April 20, 1983.” SSA.gov. https://www.ssa.gov/history/1983amend.html (accessed October 9, 2025).

[6] Manganaro, John. “This Social Security Strategy Gives Retirees More to Spend.” ThinkAdvisor.com. https://www.thinkadvisor.com/2025/09/03/this-social-security-claiming-strategy-reliably-lifts-retirement-income/ (accessed October 8, 2025).

[7] Christian, Rachel. “How an annuity can help you delay Social Security and retire early.” Bankrate.com. https://www.bankrate.com/retirement/bridging-the-gap-to-social-security-with-an-annuity/ (accessed October 8, 2025).

[8] Steiner, Ken. “Should Your Clients Use Savings to Defer Social Security?” Advisorperspectives.com. https://www.advisorperspectives.com/articles/2025/08/19/should-clients-use-savings-defer-social-security? (accessed October 8, 2025).

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