• Chris Stein, CFP®

Delaying Your Own Social Security Benefit While Claiming A Survivor Benefit

A reader from Wisconsin looks for clarification on whether someone who is already claiming Social Security benefits can postpone their own benefit to age 70 while claiming a survivor benefit.


"My aunt is 67 and was widowed last year. She is already receiving Social Security benefits on her own record that exceed what her survivor benefits would be, but not by a whole lot. I’m wondering if she has the option of suspending her own benefit and receiving the survivor benefit until she reaches age 70, while allowing her own retirement benefit to accrue delayed retirement credits. Is this possible?”


The circumstances you describe do happen occasionally, and the good news is that the answer is, "Yes." What is being asked can be done. Let me explain why and how this might happen.


The ability to do so comes from two things. First, the retirement benefit you might claim and the spousal benefit you might claim while you're living and married to them (or divorced, but you qualify because you were married for more than ten years) both come out of one pool of money. And, technically, survivor benefits come out of a separate pool of money. So, in this case, you will reach into one pool for one set of benefits and into a separate pool for other benefits. And pulling money out of either pool doesn't affect what's going on in the other pool.


Because spousal and your own benefit come out of the same pool, those interact and can conflict if you try to do one over the other independently. But there is independence between the retirement benefit your aunt is already collecting and the survivor benefit that she's now eligible to collect because her spouse passed away.


That's the first key.


Since she's already collecting, the second key is her ability to turn off her own retirement benefit.


You achieve that right once you reach your Full Retirement Age (FRA). The maximum FRA now is 67, which she has already reached. That age may change in the future, but for now, most everyone's FRA will be sometime between age 66 and 67. There may still be some people who reached it at an earlier age, but for the most part, it's between 66 and 67.


At your FRA and older, you are allowed to do one specific thing: you can suspend your benefit. And while your benefit is in suspension, your account will accrue delayed retirement credits.


It's those two facts that grant your aunt the ability to do your suggested strategy.


The survivor benefit does not grow with delayed retirement credits, so waiting to claim the survivor benefit – letting it grow in the background and switching – is no help.


However, if your retirement benefit is now already bigger than (or close to) the survivor benefit, there is something you can do to affect the retirement benefit.


Let's look at suspending benefits. Suspending just means pushing the "pause" button. (It's different from withdrawing, which we've discussed in other cases.) Social Security will allow your aunt to suspend, and they will start granting delayed retirement credits until she reaches age 70.


Normally, if all she had was her own retirement benefit, she'd be faced with the dilemma of pausing it but then living on nothing while waiting for the benefit to start up again at 70. But, in her case, she can hit pause and suspend her own benefit, claim the survivor benefit to be paid while waiting, and then" un-pause" her now-larger benefit.


I'm assuming she didn't just turn 67. But if she did, there would be three full years of delayed retirement credits that could be applied to her own benefit, increasing it by 24 percent. Of course, it's unlikely that the timing is perfect, so it will be some number less than three full years, but they'll pay 2/3 of a percent per month (or 8 percent per year). Delayed retirement credits are granted on a monthly basis.


When your aunt turns her retirement benefit back on at 70, they'll reward her with all the delayed retirement credits that were accrued while it was paused or suspended.


This strategy doesn't always work out. Sometimes you hit pause, and the retirement benefit never gets as big as the survivor benefit. In that case, you ignore the strategy. Instead, you simply switch to the survivor benefit when it becomes available and go about your life collecting that benefit.


But in a case where pausing her benefit – or not claiming it in the first place – will result in your aunt's benefit growing to a size bigger than the survivor benefit, this is a wonderful strategy. She can be collecting money from the survivor benefit while waiting for her benefit to get to its maximum size at age 70.


So, yes, she can absolutely do this given the facts that have been described to me. I haven't heard anything that should prevent her from doing it.


Some of you may be saying, "Wait, you can't suspend. The claim-and-suspend strategy is gone." No, what's gone is the claim-and-suspend strategy in allowing your spouse to continue to collect on your record. But you can still suspend. The only restriction on suspension is that you have reached your FRA, which your aunt has in this particular case.


Now, Social Security doesn't call you proactively and say, "Hey, guess what, you're leaving money on the table if you don't do this." They're not allowed to reach out like that. You have to find such options out somehow, in this case through a family member. Unfortunately, a lot of people would not have realized this was even possible.


Many of the great claiming strategies that were available five years ago – such as file-and-suspend, claim-now-claim-more-later, and the pay-back strategy – are all gone. But this very attractive strategy is still available.

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