You've decided to delay Social Security to 70 (or you're considering it). Good. Now the practical question: what do you live on between now and then?
There are three honest answers. This article compares them — without pretending one is magic.
Option 1: The IRA Systematic Withdrawal
The simplest version: turn on a monthly systematic withdrawal from your IRA equal to roughly your projected age-70 Social Security check. Let it run until 70; shut it off when Social Security starts.
Pros: No product to buy, no contract, no fees. Full flexibility.
Cons: Exposed to market timing if invested. If you set it up from bonds or cash and hold static, this is nearly identical to Option 3 below — just less structured. If you're pulling from equities in a downturn, you can dig a hole (sequence-of-returns risk).
For a disciplined investor with a big enough cash/bond bucket, this is fine. For most people it drifts.
Option 2: The Period-Certain SPIA Bridge
You hand an A-rated carrier — Athene, Corebridge, Pacific Life, Nationwide, or Brighthouse are common examples — a lump sum from your IRA in exchange for monthly checks over a fixed term (usually 5 years for a 65-year-old, 8 years for a 62-year-old). No cash value; when the term ends, the SPIA is done.
Pros: Contractually raid-proof. Zero market exposure. Zero decisions. Feels exactly like a paycheck. Excellent for retirees who worry they'll pull money out in a panic.
Cons: Illiquid. Carrier-credit risk (mitigated by A-rated carriers + state guaranty associations). At current rates, typically slightly worse yield than a comparable Treasury ladder.
Frame it correctly: the SPIA is a behavioral tool, not a tax trick or a yield edge. Anyone selling it as either is stretching.
Option 3: The Treasury or CD Ladder
Build a 5- or 8-rung ladder of Treasury notes or brokered CDs. Each rung matures the year it's needed. Interest coupons auto-deposit into checking every month. At maturity, use the principal for that year's income; the remaining rungs keep earning.
Pros: At current rates, typically slightly higher yield than the SPIA. Fully liquid — you can sell any rung at market. Backed by the U.S. Treasury (or FDIC for CDs). No carrier-credit risk.
Cons: Requires you to leave it alone. If you panic in a downturn and sell rungs early, you can take a small loss. Also requires setup discipline.
Which One Should You Actually Use?
If I had to pick a default for a disciplined retiree with a strong bond/cash bucket: the Treasury or CD ladder. Best rate, full liquidity, zero product wrapper. Simple.
If I'm working with a retiree whose real risk is themselves — someone who's admitted they'll raid the account for a new car or panic-sell in a downturn — the SPIA earns its place. It's not the cheapest wrapper. It's the raid-proof one.
The systematic withdrawal is the weakest of the three unless you have massive cash reserves and rock-solid discipline.
The Second-Order Benefit Nobody Mentions
Regardless of which vehicle you use, spending IRA dollars in your 60s to fund the bridge does something quietly powerful: it shrinks the base your Required Minimum Distributions will hit at age 73. Smaller RMDs mean less taxable income later, less Social Security taxation, and less IRMAA exposure.
If you have outside taxable cash to pay conversion taxes, layer Roth conversions on top. Low bracket + no Social Security + shrinking IRA = the best conversion window of your life.
A Worked Example Comparing the Three
65-year-old bridging 5 years to a $3,600/mo target. Approximate lump sums required at current rate levels (these are illustrative — get real quotes before committing):
Systematic withdrawal from a balanced portfolio. Roughly $216K set aside if you assume the portfolio matches inflation. But you're bearing sequence-of-returns risk — a bad first year can require you to sell equity into a downturn.
Period-certain SPIA. Roughly $190–200K at current SPIA rates for a 5-year period-certain payout of $3,600/mo. Contract-guaranteed, no market risk, but illiquid.
Treasury or CD ladder. Typically slightly cheaper than the SPIA at current levels — call it $185–195K for the same monthly cash flow. Fully liquid, backed by Treasury or FDIC.
The gap between the SPIA and the ladder is small in dollar terms. The gap between either and the systematic withdrawal from equities is much larger in risk terms, not necessarily cost.
Practical Implementation Notes
A few operational details that trip retirees up:
Where the money comes from. Fund the bridge from the pre-tax IRA, not from Roth. You want to spend pre-tax dollars in low-bracket years.
Where it lands. Have the SPIA or ladder pay into the same checking account Social Security will later deposit into. Same routing, same date-of-month if possible. The seamless-handoff visual isn't just aesthetic — it neutralizes the psychological pull to claim early.
What to name it. If it helps behaviorally, mentally label the bridge "Social Security Prepayment." Because that's exactly what it is.
Frequently Asked Questions
What's the cheapest way to bridge income to age 70?
At current rates, a Treasury or CD ladder is typically slightly cheaper than an equivalent SPIA. The SPIA earns its cost only when its raid-proof structure is what you actually need.
Can I use a variable annuity to bridge?
Not well. Variable annuities carry market risk during the bridge period — exactly the risk you're trying to avoid. Period-certain SPIAs (fixed) or Treasury/CD ladders are the correct tools.
Do I lose the money if I die during a period-certain SPIA?
No. Period-certain SPIAs pay any remaining scheduled payments to your named beneficiary. This is different from a life-only SPIA, which we're not using here.
Should I use my Roth or my traditional IRA to fund the bridge?
Almost always the traditional IRA. You want to spend pre-tax dollars in low-bracket years and keep Roth compounding tax-free for later.
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