I received a heartbreaking email from a reader the other day asking for advice on when he should claim his Social Security benefit given his recent diagnosis of stage 4 lung cancer. He is 61 and no longer working. His wife is 62.
"[My wife] has worked some, but her full retirement age benefit — or even her delayed benefit at age 70 — would never be equal to her survivor benefit" the reader said. His wife's full retirement age benefit is about $900 per month. His is about $2,500 at his full retirement age of 66 and 8 months.
His wife had filed for Social Security benefits on her own earnings record but withdrew her application before receiving any benefits when the couple learned of his terminal diagnosis.
The couple had lots of questions about the best way to proceed to maximize the wife's
future survivor benefits. They had gotten conflicting information from a variety of sources, including the Social Security Administration, and asked me to help sort through the various rules and claiming strategies.
"I guess we have a unique situation knowing that I will most likely die before my full retirement age," he wrote. "I was concerned about not fully understanding the rules and wanted to make sure my wife of 40 years would get the highest benefit possible."
The reader's first question: Can his wife claim a reduced retirement benefit on her own work record now and wait until her full retirement age to claim the full survivor benefit?
Yes, I responded. Retirement benefits and survivor benefits are two different pots of money. His wife could claim her own reduced retirement benefits now at age 62, worth about $665 per month, and still claim full survivor benefits of about $2,500 per month at her full retirement age.
Surviving spouses and eligible surviving ex-spouses who were married at least 10 years can choose to collect their retirement and survivor benefits in either order and switch to the larger benefit later. And they can do this regardless of when they were born. The new Social Security
claiming rules that limit the ability of people born after 1953 to file a restricted claim spousal benefits do not apply to survivor benefits.
Second question: Will her survivor benefits be reduced if she files for her own retirement early and her husband dies before she reaches full retirement age?
No. She can wait until she reaches full retirement age to claim her full survivor benefits, which would be worth 100% of what her husband was entitled to at the time of his death. If she claims before then, her survivor benefits would be reduced.
In some cases, the age for full retirement benefits is different than
the age for full survivor benefits. For example, the wife, who was born in 1957, has a full retirement age for retirement benefits of 66 and 6 months, but her age for full survivor benefits is 66 and 2 months.
Question three: The reader does not plan to file for his Social Security, so his wife will not be receiving spousal benefits. Will the Social Security Administration automatically start her survivor benefits at a reduced rate when they learn of his death?
No, I replied. As long as you do not file for your retirement benefits, she would be collecting solely on her own earnings record and could decide when to file for her survivor benefits. But if you had already claimed Social Security and your wife was collecting even a portion of her benefits based on your earnings record, her spousal benefit would automatically convert to a survivor benefit upon your death and the amount she would receive would be based on her age at that time.
Question four: Will she get the full survivor benefits at her full retirement age or will she have to wait until her husband would have reached his full retirement age?
She would receive the maximum survivor benefit if she claimed at her full retirement age for survivor benefits, I said. Waiting beyond her full retirement age to claim would not result in a larger amount as survivor benefits do not qualify for
delayed retirement credits of 8% per year the way that retirement benefits do.
Check out Mary Beth Franklin's podcast, Retirement Repair Shop.
