Many people assume that retirement age and the age they begin Social Security benefits naturally line up — but that’s rarely true.
In fact, most retirees stop working earlier than they start collecting benefits, creating a potentially risky financial gap.
According to a MassMutual survey, the average retirement age in 2024 was 62, while AARP data shows the average Social Security claiming age is 65.
That leaves a three-year window with no paycheck and no benefit income — and for some people, the gap is even longer.
This gap may seem small, but it can dramatically influence how long your savings last. Here’s what you need to understand.
Understanding The Gap Between Retirement And Social Security
Retiring before claiming Social Security creates a financial dead zone where you rely entirely on your own savings for expenses.
This period becomes especially dangerous if your investments face volatility.
A Real-World Example: How One Gap Can Shrink A Nest Egg
Consider Susan, who plans to retire at 60 but wait until 65 to start receiving her estimated $25,000 per year in Social Security.
To maintain her lifestyle, she needs $60,000 annually, meaning she withdraws about 6% from her $1 million 401(k) each year.
Since her portfolio is invested fully in low-cost S&P 500 index funds, and the index has historically grown 10% per year on average (SmartAsset), she feels confident.
But the market doesn’t cooperate.
A severe bear market hits:
- Year 1: stock market drops 10%
- Year 2: another 10% drop
- Years 3–5: the market remains flat
By the end of five difficult years, Susan’s once-healthy portfolio has fallen to just $527,400 — before collecting her first Social Security check.
Now her annual withdrawals equal over 10% of the remaining balance.
At this pace, her savings could run out much faster, especially if inflation rises or the market stays weak.
This illustrates the core issue:
The years between retirement and Social Security can destroy your long-term financial security if you don’t plan properly.
How A Financial “Bridge” Can Save Your Retirement
To protect your retirement savings, many advisors recommend building a financial bridge — a pool of safer, low-volatility assets used specifically to cover expenses during your Social Security gap years.
For Susan, the major problem was having 100% of her investments in stocks, leaving her exposed during a downturn.
How A Bridge Strategy Could Have Helped
If Susan allocated $300,000 of her $1 million portfolio to safer options — such as bonds or Treasuries yielding around 5% annually — her outcome would have been very different.
Under the same market conditions:
- Instead of falling to $527,400, her total assets would shrink to $601,800
- That’s a 14% higher balance, giving her more flexibility and security
This cushion helps preserve long-term savings and prevents early depletion.
Pros And Cons Of A Bridge
Benefits:
- Protects savings during market downturns
- Reduces risk during the most vulnerable years
- Allows retirees to delay Social Security and secure a larger benefit
Downsides:
- If stocks surge during these years, a conservative portfolio may miss higher returns
Still, for most retirees — especially those with lower risk tolerance — shifting some assets to fixed-income investments, Treasuries, or cash equivalents offers peace of mind.
Why This Strategy Matters More Than Ever
Protecting your savings during the gap years is not simply about filling an income hole — it’s about ensuring the money you’ve spent decades building continues to support you throughout your retirement.
A well-planned financial bridge allows you to enter the Social Security years with stronger savings, more confidence, and a more sustainable withdrawal rate.
Retiring before claiming Social Security is common, but the years in between can be financially dangerous if you’re not prepared.
By recognizing the potential risks — such as market downturns, inflation, and oversized withdrawals — you can take smart steps to safeguard your nest egg.
Creating a bridge strategy with a mix of safer assets can protect your long-term savings and make sure you enter retirement with stability, not stress.
The stronger your bridge, the smoother your transition into a secure, sustainable retirement.
FAQs
A financial bridge is a pool of safer assets used to cover expenses during the years between retiring and claiming Social Security. It reduces the risk of selling volatile investments during downturns.
Claiming earlier reduces your lifetime benefits. Many people delay claiming to secure a higher monthly payment, but that increases pressure on your savings.
Common low-risk options include bonds, Treasuries, high-yield savings, CDs, and short-term bond funds, which help preserve capital during market volatility.
Related Posts
