Delaying Social Security is one of the most reliable ways to raise your lifetime guaranteed income. The catch is that you have to live on something else while you wait. That gap is where a short-term MYGA ladder can earn its keep: you set aside a defined amount, know exactly what it will pay out each year, and let your Social Security benefit grow in the meantime.
Why Delay at All?
Your Social Security benefit depends on when you claim. For someone whose full retirement age is 67, claiming at 62 reduces the benefit to about 70% of the full amount. Waiting past full retirement age earns delayed retirement credits of 8% per year until age 70, so waiting from 67 to 70 raises the benefit by about 24%. The benefit also continues for life, with cost-of-living adjustments, and a surviving spouse generally steps up to the larger of the two benefits.
The Problem: A Gap to Fund
If you stop working at 67 and want to delay until 70, you need three years of income from another source. People usually cover this from savings, but the money is often sitting in accounts that move with the market, which is exactly what you don't want when the withdrawals have a fixed start date and a fixed purpose.
How a MYGA Bridge Works
The idea is simple: instead of holding a lump sum and hoping, you buy a small ladder of MYGAs timed to mature in each year you need income. One matures at the end of year one, one at the end of year two, one at the end of year three. Each pays out a known amount on a known date, and because each earns a guaranteed rate until then, you set aside less than the total you'll need. Our post on MYGA laddering covers the general method.
| Illustration: replacing $2,800 a month ($33,600 a year) for 3 years | MYGA term | Needed at maturity | Deposit today |
|---|---|---|---|
| Year 1 income | 1 year | $33,600 | $31,698 |
| Year 2 income | 2 years | $33,600 | $29,904 |
| Year 3 income | 3 years | $33,600 | $28,211 |
| Total | $100,800 | $89,813 |
This illustration assumes a hypothetical 6.00% compound rate on each term for simplicity. It is not a quote, since actual rates differ by term and carrier and change often (and not every carrier offers every short term). Check live numbers on our rate tool. The difference between the $100,800 you'll receive and the $89,813 you set aside is the interest the MYGAs earn along the way.
What You Get for Waiting
Using a hypothetical full-retirement-age benefit of $2,800 a month at 67:
- Claiming at 70 raises it to about $3,472 a month, roughly $672 more every month, or $8,064 a year, for life.
- The bridge cost about $89,813 in this illustration. Divided by the extra $8,064 a year, it takes roughly 11 years of the higher benefit to recover that outlay, before counting what that money could have earned elsewhere or any cost-of-living adjustments on the larger benefit.
- The higher benefit also becomes the survivor benefit, which can matter a great deal if one spouse is likely to outlive the other.
So delaying isn't automatically the right call. It tends to favor people in good health, with family longevity, who are the higher earner in a couple, or who value a larger guaranteed paycheck later over a smaller one sooner.
Things to Keep in Mind
- Taxes. MYGA interest is taxable as ordinary income when it's paid out (if the money is non-qualified), so the net amount available each year is less than the gross.
- Rate assumptions. If rates fall before you buy, you'll need to set aside more. Lock the rates when you're ready to fund the plan, not later.
- Flexibility. A bridge is built around specific dates. If you may need the money sooner, review each contract's free withdrawal terms first.
- The claiming decision itself. Your actual benefit estimate is on your my Social Security account at ssa.gov. We don't give Social Security claiming advice, so look at your own numbers, and your spouse's, before committing to a date.
The takeaway: A MYGA bridge turns the gap years into a defined, guaranteed schedule so you can delay Social Security without drawing on market-exposed money. Whether delaying makes sense depends on your health, your spouse, and your other income, but if it does, the bridge is a clean way to fund it.
This article is for educational purposes only and is not Social Security, tax, or investment advice. Figures are hypothetical, assume a 6.00% compound rate for illustration only, and do not reflect any specific product, quote, or guarantee. Social Security benefit rules and your actual benefit amounts are determined by the Social Security Administration. Guarantees are backed by the claims-paying ability of the issuing insurance carrier.
Questions about your own situation? Contact Devin for a free, no-pressure conversation. Licensed in multiple states. No commitment required.