Claiming Order and Survivor Benefits

Someone from Mississippi asks about a survivor benefit strategy for their sibling...

"I have a Social Security question regarding my brother, who lives in Mississippi... My youngest brother turned 60 this year. His wife passed away several years ago after 26 years of marriage, and he has not remarried. He worked as a firefighter and did not pay into Social Security for that role, but he did pay in through a second job. On his own record, he can collect $800 per month starting at age 62. His late wife was a nurse, and he has a potential survivor benefit of $2,000, which I believe is based on his Full Retirement Age (FRA) of 67. I advised him to verify these figures with his local Social Security office before making any decisions. My understanding is that he could collect his own reduced benefit at age 62 and then switch to the full survivor benefit at age 67 to receive the maximum amount. Does this strategy sound correct?"*

How the two benefits compare

This case runs the opposite direction from the usual survivor benefit strategy. Normally it makes sense to claim a reduced survivor benefit first and let your own retirement benefit grow until 70, when it reaches its largest amount. That approach only works if your own benefit will eventually surpass the survivor benefit. Here, it will not.

Based on the figures in the email, an $800 payment at 62 reflects a 30 percent reduction from a Primary Insurance Amount (PIA) of roughly $1,140. That $1,140 is what he would receive at his FRA of 67. If he waited until 70 instead, delayed retirement credits would grow that benefit by 8 percent per year for three years, or 24 percent, bringing his own retirement benefit to about $1,415 a month. That is still well below the $2,000 survivor benefit.

When does the survivor benefit reach $2,000?

Survivor benefits do not earn delayed retirement credits past full retirement age. The $2,000 figure is the maximum this benefit will ever reach, and he gets there at 67, not 70. Waiting past 67 for the survivor benefit gains nothing.

He does have the option to claim the survivor benefit as early as 60, though at a reduced rate. Since he is already 60, that door is open to him now if he needed the income immediately. But given that he also has his own retirement benefit available, there's a more efficient order to consider.

The suggested sequence

Since his own retirement benefit will never catch up to the survivor benefit, the survivor benefit should be treated as the target amount to protect and grow to its maximum. That points to this order: claim the reduced retirement benefit of $800 at 62, collect that for five years, then switch to the $2,000 survivor benefit at 67 and keep that amount for life.

This is a reasonable read of the numbers as given, though it addresses the Social Security piece in isolation. The right call ultimately depends on his full financial picture, including whether he needs income before 62 and what other resources he has to draw from in the meantime.

Remarriage after 60 does not cost the benefit

One relevant detail from the email: he has not remarried. That matters less than it might seem, now that he's past 60. Once someone reaches age 60, remarriage no longer affects eligibility for a survivor benefit from a prior spouse. If he were to remarry now, he would keep the $2,000 survivor benefit tied to his late wife's record.

The pension offset issue that no longer applies

Given his firefighter work, his second job history raises a related concern: the Government Pension Offset (GPO), which historically reduced survivor benefits for people receiving a pension from work not covered by Social Security. That provision was eliminated in the final days of the Biden administration through the Social Security Fairness Act. So the $2,000 survivor benefit is not reduced on account of a firefighter pension, non-covered or not.

It's worth noting that this could change. Right now, a household with one spouse on Social Security and one spouse with a non-covered pension has an advantage over a household where both spouses were Social Security participants: the survivor in the mixed household gets to keep both benefits, while the survivor in the all-Social-Security household only keeps one. As lawmakers look at other fixes to Social Security in the coming years, some version of GPO could find its way back into law. For now, though, it does not affect this situation.

---

This question was discussed on an episode of the Retirement and IRA Show podcast. For the full discussion click here: https://www.theretirementandirashow.com/podcast/social-security-roth-401k-hsa-reimbursement-pension-options-trust-planning-qa-2630/

*Question made have been edited for clarity