We received the following question from a reader this week:
“My mother will be turning 65 this year and is trying to figure out how to maximize her SS benefit. She did not work the 40 quarters required to have a personal benefit. However, my father worked and paid in while he worked prior to passing at age 56. She is planning on using survivor benefit from my deceased father. When we went to visit the SS office, we were told that she will receive her maximum benefit when she turns 66 since survivor benefits do not grow if you wait until 70 to start collecting as it does with a personal benefit. Just wanted to make sure that we received correct information and will not miss out on a larger benefit check by turning on SS at 66.”
It is true that a survivor benefit does not grow due to a survivor delaying their claim after their full retirement age (age 66 for your mother). So in this instance it appears you are getting correct information from your local SS office. However, I’d like to expand on my answer for other people who may have slightly different circumstances. Here are a few things to keep in mind….
Increasing Your Spouses Survivor Benefit
While living, you can increase the survivor benefit that will be left behind for your spouse by delaying the claim for your own retirement benefit. Even though the survivor cannot generate delayed retirement credits after their spouse passes away, the survivor benefit is based upon what the deceased person was either collecting at their time of death or what they could have collected if they claimed immediately prior to death. This means that if they increased their benefit by delaying past age 70, the surviving spouse will get benefit of that increase in their survivor benefit. This is the reason we always look at the possibility for one spouse to try to delay filing while alive in order to generate a larger survivor benefit since it is likely one spouse will outlive the other and only be receiving one benefit.
No Reason to Wait
In this reader’s case, the husband died prior to claiming. If the husband had lived to age 62 and chosen to file early, this would permanently reduce not only his benefit, but also the survivor benefit due his widow. There are protections built in for the widow in a case like this so that the survivor does not end up with a severely reduced benefit simply because their spouse chose to file early. The calculation for this is pretty convoluted so I never do this by hand anymore, but rather rely on some software to make this determination. The reason I bring this up is that survivors who benefit from this protection will often find there is no reason to wait until their full retirement age to claim since the survivor benefit may max out prior to that age. In that case you will be leaving money on the table if you wait until your full retirement age to claim. It is definitely worth investigating if this is the case when you find yourself in a situation like this. Social Security will not call you to let you know you should come in early to file. It is your responsibility to figure this out, or to reach out to an expert or the SS office.
Strategies in Claiming
Always remember that if you have both your own benefit as well as a survivor benefit, there are strategies in the timing of claiming the two that will maximize what you receive. If you find that is your situation, reach out to have an analysis done to determine the best strategy for you. This is not applicable for this reader since his mother does not have her own retirement benefit, but it happens frequently and we regularly run across people who have cost themselves money by not claiming in the optimal way.
Thanks for reading… see you next week.