I have been a road warrior lately, traveling all across the country from New York to Los Angeles spreading the word about smart Social Security claiming strategies. My favorite part is the interaction with the audience following my presentations. Although I can easily answer about 99% of the questions, every once in a while I get one that stumps me.
On a recent trip, I was surprised to be asked the same confounding question during stops in three different cities: Could a widow or widower stop collecting a survivor benefit in order to receive a larger amount later?
Frankly, I wasn't sure. I knew that anyone who is collecting retirement benefits has an once-in-a-lifetime opportunity to withdraw their application for benefits within the first 12 months of claiming them. To do so, they must file form 521 and repay any retirement benefits that they have received, as well as any auxiliary benefits collected on their earnings records by a spouse or dependent minor child.
Withdrawing an application for retirement benefits wipes the slate clean, allowing the individual to claim retirement benefits at a later date when they would be entitled to a larger amount. But no one had ever asked me if someone could withdraw their survivor benefits. I turned to the pros at the Social Security Administration for more information.
NO TIME RESTRICTION
Social Security spokesperson Dorothy Clark confirmed that individuals who are collecting Social Security survivor or disability payments can also withdraw their application for benefits. Although they, too, must repay any benefits they have received, they are not restricted to a 12-month window for withdrawing their application for benefits, she told me via e-mail. But the longer you receive benefits, the higher your repayment bill.
Surviving spouses are eligible to collect 100% of what their deceased spouse collected or was entitled to collect at time of death if the surviving spouse is at least full retirement age. The same applies to surviving ex-spouses who were married at least 10 years and who are currently single. Spouses and qualified ex-spouses who wait until age 60 or later to remarry are also entitled to collect survivor benefits.
Survivor benefits are available as early as age 60, but the benefits are reduced to just 71.5% of the deceased worker's benefit. And anyone who collects any type of Social Security benefits, including survivor benefits, before full retirement age and who continues to work is subject to annual earnings restrictions that can reduce benefits. The reductions kick in once earnings exceed $15,720 per year in both 2015 and 2016.
It might make sense for someone who collected reduced survivor benefits to withdraw their application and repay any benefits they have received in order to collect a larger survivor benefit later. But it makes no sense to delay collecting survivor benefits beyond full retirement age when they are worth the maximum amount. Survivor benefits do not accrue delayed retirement credits although cost-of-living increases between the time the worker died and when the surviving spouse begins collecting benefits would apply.
Here's some other facts about survivor benefits that you should tuck away for future reference:
• If you are already receiving benefits as a spouse, your benefit will automatically convert to survivor benefits after the Social Security Administration is notified of your spouse's death.
• If you are eligible for both a survivor benefit and your own retirement benefit, but have not yet begun collecting retirement benefits, you can apply for either retirement or survivor benefits now and switch to the other (higher) benefit at a later date.
• If you already receive retirement benefits, you can apply for benefits as a widow or widower only if the retirement benefit you receive is less than the benefits you would receive as a survivor. However, if you became entitled to retirement benefits less than 12 months ago, you can withdraw your retirement application and apply for survivor benefits only. If you do that, you can reapply for retirement benefits at a later date when they will be higher.
• Finally, your full age for claiming survivor benefits may be different from your full retirement age. For example, while 66 is the age to receive full retirement benefits if you were born from 1943 through 1954, you can receive full survivor benefits at age 66 if you were born from 1945 through 1956. And although those born in 1960 must wait until 67 to receive full retirement benefits, they are eligible for full survivor benefits at 66 and 8 months. Click
here to see the chart for survivor benefits by birth year.
(Questions about Social Security? Find the answers in my ebook.)
Mary Beth Franklin is a certified financial planner.
