A new study suggests Americans may be open to using 401(k) assets as a "bridge" income stream so they can delay taking Social Security benefits.

Using 401(k) assets in such a way, as part of a default feature of employee benefits plans, could be a strategy for increasing lifetime income in retirement since it would result in higher Social Security benefits, the Center for Retirement Research at Boston College said in a newly released report.

Researchers found that up to about a third of workers would use such an option.

"The bridge option would use 401(k) assets to pay retirees an amount equivalent to their Social Security benefits so they can postpone claiming benefits, thereby increasing their monthly payment when they do eventually claim," the report said.

The authors of the study, Alicia H. Munnell (the center’s director) and Gal Wettstein (a senior research economist), noted that the 401(k) bridge option could serve as an important strategy for tackling the problem of lifetime income in retirement. They said that while annuities represent a more conventional strategy for guaranteed lifetime income, the public continues to have an aversion to the product for a number of reasons.

"Explanations for the low demand include the high cost of private annuities due to adverse selection, a reluctance to hand over a pile of accumulated assets for a stream of future income, and a failure to understand the value of insurance against outliving one’s resources," they wrote. "To address these impediments, employers could increase the availability of lifetime income by adopting a Social Security ‘bridge’ strategy within their 401(k) plans."

As envisioned by the researchers, the bridge option would allow pre-retirees to use 401(k) assets as an income bridge that would let them delay taking Social Security benefits as long as possible. Because the benefits increase every year they are delayed, participants would essentially be buying a higher lifetime Social Security income, the researchers said.

The authors estimate that workers can increase their monthly Social Security benefits by 76% by claiming them at the maximum recipient age of 70 rather than the minimum age of 62.

Munnell and Wettstein also stressed that the strategy would overcome one of the biggest hurdles to getting U.S. workers to focus on guaranteed income: their distrust of insurance companies and annuities.

"Purchasing additional Social Security income does not involve handing over accumulated assets to an insurance company, provides a familiar form of lifetime income that is adjusted for inflation, and does not expose the purchaser to higher costs from adverse selection," they wrote.

The researchers envisioned a strategy that, during the bridge period, would convert between 20% and 40% of a worker's 401(k) to income.

To survey people's receptiveness to the plan, researchers used a pre-existing, nationally representative panel of U.S. pre-retirees created by NORC (formerly known as the National Opinion Research Center) at the University of Chicago. All respondents were between 50 and 65 years old, were not retired, and had balances of at least $25,000 in their 401(k), the report said.

The pool of 1,349 respondents was then divided into four groups. The "control" group was given basic information about how a bridge option would work. The second "insurance" group was given a description that framed the option as a form of insurance. The third group, the "more information" group, was given more details on the plan than the control group. Finally, the fourth group, called the default group, was asked about a plan that would be a default feature of their employee 401(k) plans.

After the survey was conducted in July, researchers found that the "additional information" group was most receptive to the plan, with 35% saying they would participate. They were followed by the "insurance" group at 32.7%, the "default" group at 31.3% and the control group at 26.8%.

The report said that, given this was the first time the respondents had heard of such an option, the results indicate the idea is viable.

"The results indicate a substantial interest in the bridge strategy," the report said. "This strategy is novel, and the survey is likely the first time respondents would have encountered the idea of drawing down their 401(k)s to postpone claiming Social Security. The fact that over one-quarter of respondents would adopt the strategy based on such limited information as the control group had is noteworthy."

The way the bridge option is framed could have a significant impact on how many people participate, the researchers noted. They pointed to the increased acceptance among the groups that received more details, or in which the option was described as a form of insurance or a default plan feature. "A simple nudge can dramatically increase usage of the bridge option," the researchers said.