Building Your “Bridge to Social Security”
When most people think about retirement, the big question is:
“When should I start Social Security?”
But if you’re hoping to retire in your 50s—or even early 60s—the more urgent question is often:
“How do I pay the bills until Social Security starts?”
That time between your last paycheck and your first Social Security deposit is what I like to call your “bridge period.”
Maybe you want to retire at 58 and delay Social Security to 70. That’s a 12-year gap you need to cover without a paycheck and without putting your long-term plan at risk.
In this post, I’ll walk through a few ways to build that bridge:
Creating a bond/CD/TIPS ladder
Using pension payout options strategically
Taking a total-return approach with a cash buffer
Keeping a HELOC as a backup
And, importantly, which accounts the money actually comes from
Step 1: Know Your Gap
Before getting into strategies, you need three numbers:
Retirement age: When do you realistically want to stop full-time work?
Social Security start age: When do you expect to claim? (62, full retirement age, 70?)
Annual spending need: After taxes, how much does it take to run your household?
From there, you can estimate your annual “bridge need.”
Example:
Retire at 58
Claim Social Security at 67
Need $80,000/year after taxes
No other guaranteed income yet
That’s 9 years where the money has to come from your savings, investments, or other sources.
Once you know the size and length of your gap, you can mix and match strategies.
Strategy #1: Build a Bond / CD / TIPS Ladder
A ladder is simply a series of bonds, CDs, or TIPS that mature in different years. The idea:
You buy low-risk investments that mature each year of your bridge.
As each rung matures, you use that cash to fund that year’s spending.
Example: If you want 5 years of very stable income, you could build a 5-year ladder with:
Year 1: High-yield savings / money market
Years 2–5: CDs, Treasuries, or TIPS maturing in those years
Pros:
Very stable, predictable cash for near-term expenses
Reduces the pressure to sell stocks during a market downturn
Easy to explain and stick with
Cons:
Lower expected return versus staying fully invested
You still have to plan for what happens after the ladder ends
Inflation risk if you don’t use TIPS or adjust over time
For many early retirees, a ladder can cover the first 3–10 years, while the rest of the portfolio stays invested for the long haul.
Strategy #2: Use Pension Payout Options Intentionally
If you’re fortunate enough to have a pension, the payout options are often confusing—but they can be a powerful part of your bridge.
Common choices include:
Lifetime monthly payment (traditional pension)
“Level income” options that pay more before Social Security starts and less after
Lump sum or installment payouts (sometimes over 5 years, etc.)
Some retirees might:
Use a short series of lump sums (for example, five annual payments) as a structured bridge to Social Security.
Combine a smaller monthly pension with a partial ladder or investment portfolio.
Key trade-offs:
Lump sums / installments offer flexibility but put the investment risk on you.
Lifetime pensions reduce longevity risk but may not perfectly match your bridge timing.
This is an area where it’s worth running the numbers, stress-testing different options, and considering taxes, survivor benefits, and how it all fits with Social Security.
Strategy #3: Total-Return Investing with a 3–5 Year Cash Buffer
Another common approach is a total-return strategy with a cash or short-term bond buffer.
Here’s the basic structure:
Keep 3–5 years of planned withdrawals in cash or very short-term bonds.
Invest the rest of the portfolio in a diversified mix of stocks and bonds.
In “normal” or good market years, you refill the cash bucket from investment gains.
In bad market years, you spend from the cash bucket instead of selling stocks at a loss.
For example, if you need $80,000 per year and want a 4-year buffer:
Target ~$320,000 in cash / short-term bonds
Invest the rest in a diversified portfolio
This helps manage sequence-of-returns risk—the danger of getting hit with poor returns in the first few years of retirement while you’re taking withdrawals.
Strategy #4: HELOC as a Backup “Emergency Bridge”
A home equity line of credit (HELOC) can be a useful backup tool in early retirement—but I usually don’t like it as a primary bridge.
How it can fit:
You set up a HELOC while you’re still working (when it’s easier to qualify).
You don’t rely on it for normal living expenses.
But in a sharp market downturn, you might draw from the HELOC temporarily instead of selling investments at a major loss, then pay it back once markets recover.
Risks to keep in mind:
Interest rates can change.
The bank can reduce or freeze your line.
Too much reliance on debt can increase stress and risk in retirement.
Used carefully, a HELOC is a flexibility tool, not a replacement for real planning.
Where Does the Money Actually Come From?
Designing your bridge isn’t just about how to invest—it’s about which accounts you’ll draw from and in what order.
Most people have a mix of:
Taxable investment accounts (brokerage)
Pre-tax retirement accounts (401(k), 403(b), traditional IRA)
Roth accounts (Roth IRA, Roth 401(k))
Cash / CDs / savings
Maybe home equity
The sequence you pull from can have a big impact on both taxes and flexibility.
1. Taxable Accounts: Often the Most Flexible
For many early retirees, taxable brokerage accounts are the easiest bridge source:
No age-based penalties for withdrawals
You may owe capital gains tax on profits, but you control how much you sell
Dividends and interest can help refill your cash buffer
This often makes taxable accounts a natural place to start funding those first “bridge years.”
2. Accessing Retirement Accounts Before 59½
If most of your money is in retirement accounts, it’s easy to feel “locked out” until 59½. But there are a couple of ways to legally access that money earlier without the normal 10% early withdrawal penalty, if you follow the rules carefully.
The “Rule of 55” (Employer Plans)
The so-called Rule of 55 applies to many 401(k) and 403(b) plans:
If you separate from service (retire, quit, are laid off) in the year you turn 55 or later (50 for some public safety employees), you may be able to take withdrawals from that specific employer’s plan without the 10% penalty.
Ordinary income tax still applies; you’re just avoiding the penalty.
The money usually needs to stay in that plan—rolling it to an IRA can remove this option.
For someone retiring at 56 with a large balance in their current 401(k), the Rule of 55 can provide a very real bridge source between 56 and 59½.
72(t) SEPP (Substantially Equal Periodic Payments)
For IRAs (and sometimes employer plans), there’s another option called 72(t) SEPP—Substantially Equal Periodic Payments:
You commit to taking a series of calculated withdrawals every year using IRS-approved methods.
You must continue these payments for at least 5 years or until you reach 59½, whichever is longer.
If you stop or change the payments incorrectly, the IRS can retroactively apply penalties.
72(t) can unlock IRA money before 59½ without the 10% penalty, but it comes with handcuffs—you’re signing up for a long-term withdrawal schedule. For that reason, I usually see it as a carefully planned strategy, not a casual DIY move.
Important: Both the Rule of 55 and 72(t) have detailed rules and exceptions. This is a high-level overview, not tax or legal advice. Talk with a professional before acting on either.
3. Roth Accounts: Extra Flexibility
Roth accounts add another layer of flexibility:
Roth IRA contributions (what you put in, not the earnings) can generally be withdrawn tax- and penalty-free at any age.
Earnings have stricter rules, especially before 59½ and before the 5-year clock is satisfied.
Some early retirees use Roth IRAs as a flexibility bucket, tapping contributions if needed while preserving the tax-free growth of the earnings for later.
There’s also a more advanced strategy called a Roth conversion ladder—gradually converting pre-tax IRA/401(k) money to Roth and later using those converted dollars as part of the bridge. Done well, this can create future tax-free income, but it comes with specific timing and tax rules, so it’s something to plan carefully rather than DIY.
4. Blending Sources Over Time
In practice, your bridge will likely be a blend:
Early years: taxable account + cash / bond ladder
Mid-50s: add Rule of 55 withdrawals from a current 401(k), if available
Late 50s: consider whether 72(t) or Roth funds play a role
All along: keep an eye on tax brackets and opportunities for Roth conversions before Social Security and RMDs kick in
The goal isn’t to find one magic account. It’s to coordinate all the pieces so that your bridge is:
Tax-aware
Sustainable
Flexible enough to handle the unexpected
Why Your Bridge Strategy Matters
Designing your bridge to Social Security isn’t just about “finding money to live on.” A thoughtful plan can:
Give you the confidence to retire before Social Security starts
Allow you to delay benefits, potentially increasing your lifetime payout
Open up years of tax-planning opportunities (Roth conversions, capital-gains harvesting, etc.)
Reduce the odds that a bad market early in retirement derails your long-term plan
And the “right” bridge usually isn’t just one thing. It might be:
A small CD/TIPS ladder for the first few years
A diversified portfolio with a cash buffer
Thoughtful decisions around pension options
A HELOC sitting quietly in the background as extra flexibility
A smart plan for which accounts you tap and when
Meet Your Guide
Hi, I’m Josh Short, a CERTIFIED FINANCIAL PLANNER® professional and founder of OptimalPath Advisors. With over 20 years in financial services, I help people like you design a clear, flexible path to financial independence- with flat-fee, commission-free advice.
Want Help Thinking Through Your Bridge?
If you’re within 5–15 years of retirement and wondering how to cover the gap before Social Security, this is exactly the kind of question we can explore in my Free Financial Checkup.
In a 30-minute Zoom call, we’ll:
Clarify your retirement timing and how many “bridge years” you might need
Talk through your big-picture resources (401(k)s/IRAs, pensions, savings, home equity)
Discuss which types of strategies (ladders, pension choices, cash buffers, etc.) might be worth exploring further
This isn’t a full financial plan or detailed projections, but it will give you a clearer sense of whether your current path lines up with the retirement timing you’re hoping for—and whether a deeper plan could help.
👉 If that sounds helpful, you can schedule your Free Financial Checkup here: [https://calendly.com/josh-optimalpathadvisors/30min]
