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  • Writer's pictureChris Stein, CFP®

Survivor vs Retirement Benefit – Which to Start First?

This week a reader who is eligible for both a Survivor benefit as well as their own Retirement benefit asked which one they should claim, and if they should switch at some future date.  They also added that their Survivor benefit was about 60% higher than their own Retirement benefit and they are currently age 62.

Since this is a common situation, usually with widows, I felt I should share our determination and also point out that the specifics of the two benefits will determine what strategy to deploy.  Let me start by illustrating the situation as the reader described with some hypothetical numbers:At age 66At age 62At age 70Retirement Benefit$1,000$750$1,320Survivor Benefit$1,600$1,296$1,600

Survivor Benefits First

If we assume a life expectancy of 85 (generally a young age for planning purposes) her lifetime benefits would look like the following if she first claimed her Survivor benefits and then switched to her own Retirement benefits at age 70 when they reach their maximum:Benefits from age 62 to 70$1,296 x 96 =$124,416Benefits from age 70 to 85$1,320 x 180 =$237,600Total =$362,016

Retirement Benefit First

If she first claimed her Retirement benefit then switched to her Survivor benefit at age 66 when it reaches its max (Survivor benefits do not grow by waiting past full retirement age) her lifetime benefits look like this:Benefits from age 62 to 66$750 x 48 =$  36,000Benefits from age 66 to 85$1,600 x 228 =$364,800Total =$400,800

So you can see that by her choosing to claim Retirement benefits first, then switching to Survivor benefits at age 66 she will increase her lifetime benefits by over $38,000 and if she lives even longer the benefit to this choice grows even higher.

Change the Numbers

However, the story changes if the numbers are a bit different.  Let’s now assume her Retirement benefit is $1,500 and her Survivor benefit is still $1,600.  Her own benefit is still lower than the Survivor benefit, but not by as much as before.  If she claims her own benefit first her lifetime benefits look like this:Benefits from age 62 to 66$1,125 x 48 =$  54,000Benefits from age 66 to 85$1,600 x 228 =$364,800Total =$418,800

But if she reverses the order and claims her Survivor benefit FIRST, then switches to her Retirement benefit at age 70 her lifetime earnings look like this:Benefits from age 62 to 70$1,296 x 96 =$124,416Benefits from age 70 to 85$1,980 x 180 =$356,400Total =$480,816

In this case the best choice by $62,000 is to claim the Survivor benefit first!!

Best Strategy is Different For Everyone

The moral of the story is that there is no one best strategy for all people, even if they appear to be in similar circumstances.  In both cases the person was eligible to claim either a Survivor or Retirement benefit.  And in both cases the Survivor benefit was the larger at their full retirement age.  The difference was the DEGREE to which the benefits differ.

If this proves nothing else I hope it supports our recommendation that you have your Social Security situation analyzed using your specific numbers.  Don’t rely on generalized advice.  Everyone has their own set of variables and the best plan for one person may not be the best for others.  Make sure you have all your options analyzed BEFORE filing for Social Security.  You only get one chance to get it right, and the wrong choice can cost you tens of thousands of dollars.

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