Widows and widowers have more flexibility than other Social Security beneficiaries when it comes to claiming strategies because retirement benefits and survivor benefits represent two different pots of money.
A surviving spouse or an eligible surviving divorced spouse can choose one type of benefit first and switch to the other benefit later if it results in a larger monthly amount. It doesn’t matter in which order they claim those benefits or when they were born.
Unlike Social Security claiming strategies that limit the ability of some people to claim only spousal benefits while their own retirement benefits continue to grow up to age 70 to those born on or before Jan. 1, 1954, surviving spouses and ex-spouses have no such birth-date restrictions.
In general, to be eligible for a Social Security survivor’s benefits, a widow or widower must have been married to the deceased worker for at least nine months and at the time of his or her death.
In the case of a surviving ex-spouse, the couple must have been married at least 10 years before divorcing. In general, the surviving ex-spouse must be single to collect survivor benefits or must have waited until age 60 or later to remarry. In the latter case, a remarried ex-spouse can collect survivor benefits on a deceased ex-spouse even if married to someone else.
Survivor benefits are worth 100% of what the deceased worker collected or was entitled to collect at time of death, provided the survivor claims the benefit at full retirement age or later. Survivor benefits are reduced if collected before full retirement age. In some cases, full retirement age for retirement benefits and survivor benefits may be different.
Generally, the earliest age for collecting retirement or spousal benefits is 62. Survivor benefits, however, are available as early as 60. But there are exceptions in both cases for younger spouses, who can claim benefits earlier if they are caring for a minor dependent child or the permanently disabled child of a retired, disabled or deceased worker.
A financial adviser recently consulted me about his widowed client, who is 65 and entitled to a survivor benefit worth $2,300 a month. In addition, her own Social Security retirement benefit would be worth $2,527 at her full retirement age of 66.
“Can she opt to take the survivor benefit now and allow her Social Security benefits to accrue 8% per year in delayed retirement credits up to age 70?” the adviser asked. Yes, she can. Her retirement benefit would be worth about $3,335 per month if she waited until age 70 to claim it.
Now imagine a surviving widow with a small retirement benefit on her own earnings record. She may want to collect her own reduced benefit as early as age 62. And even though her retirement benefits would be permanently reduced for collecting before full retirement age, it would have no impact on her survivor benefits if she waited until her full retirement age to collect it.
One caveat: Anyone who collects any type of Social Security benefit —retirement, spousal or survivor — before full retirement age is subject to earnings restrictions if they continue to work.
In 2020, they would lose $1 in benefits for every $2 earned over $18,240. In the year they reach full retirement age, there is a higher earnings limit in the months before their birthday. They could earn up to $48,600 without sacrificing any Social Security benefits. Earnings over that limit would reduce benefits by $1 for every $3 earned over that limit. Earnings restrictions disappear once you reach full retirement age.
If the deceased worker started receiving retirement benefits before their full retirement age, the survivor’s benefit will also be reduced. But the surviving spouse or surviving ex-spouse can mitigate some of the damage by waiting until their full retirement age or later to collect survivor benefits. If the widow or widower is full retirement age or older, he or she would receive the larger of what the deceased worker collected or 82.5% of the worker’s full-retirement-age benefit.
The goal for most married couples should be to maximize survivor benefits by having the higher-earning spouse delay collecting his or her retirement benefit up to age 70. The largest retirement benefit will continue as a survivor benefit for the remaining spouse and the smaller benefit would disappear upon the death of the first spouse.