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  • Writer's pictureChris Stein, CFP®

Timing and Strategies For Survivorship Benefits

A reader from Ohio asks about timing strategies behind claiming a Social Security survivor benefit.


"I have a Social Security survivor benefit question. Let's say a husband dies at age 59 before starting to collect Social Security benefits. Say his wife is also 59 at the time of her husband's death. Can the wife collect a benefit of 71.50% of her husband's PIA when she turns 60? Or does she have to wait until he would have been at his FRA? If she can access a survivor benefit at age 60, can she switch to her own benefit when she reaches her FRA?"


Yours is a good question because it raises something we don't discuss much, so I'm glad we get to tackle the topic here. It concerns what happens if you pass away before you've even claimed your Social Security benefits. How does that work?


Well, in your hypothetical case, the wife becomes eligible for a survivor benefit as young as age 60 – or as young as age 50 if she's disabled. That wasn't mentioned here, so we'll assume that's not the case. So, yes, she is eligible for a survivor benefit from her husband's record as young as when she turns age 60. You mentioned 71.5%. When someone claims a survivor benefit early – as early as 60 – it reduces the survivor benefit by 28.5%, leaving them with 71.5%.


The starting point in the calculation is generally (but not always) the deceased person's PIA or Primary Insurance Amount. The PIA is the amount the husband would receive at his Full Retirement Age or FRA. (In this hypothetical, since he is now 59, his FRA would be at age 67.) For reasons beyond our conversation today, the starting point is generally identical to or very close to the PIA.


The wife can only collect 100% of his PIA if she waits until her own FRA to collect the survivor benefit. However, her husband wouldn't have earned any delayed retirement credits at that time because he died at 59. (He has to live past his FRA and delay claiming to have grown his benefit beyond his PIA, which he didn't.) What if she waits beyond his FRA? Could she benefit from delayed retirement credits, then? No, again, he has to be alive and delay claiming past his FRA for delayed credits, so that's not an option in this hypothetical.


However, she could claim only his survivor benefit early on and later switch to her own retirement benefit. You suggested she might claim at her FRA, but she also might want to consider waiting until 70 to claim. Let's look at her options for switching.


First of all, if her benefit will never be bigger than 71.5% of his benefit, there's no reason she'd ever switch. So, the fact that you're asking about switching implies that her benefit is significant enough that it will be bigger than 71.5%. If that's true, that means her benefit could grow even more by waiting until 70.


Here's why I point that out. There's always a classic tradeoff when you delay collecting to earn delayed retirement credits: you give up the benefit you could otherwise have received in the interim in order to get a bigger benefit later. And the tradeoff is, "I don't get anything as I wait."


In a case like this one, she's collecting a benefit while waiting for her own retirement benefit to grow 8% every year. And when I say "8% every year," that's the size of the benefit that's growing; it's not a rate of return of 8%. That's very misunderstood both by consumers and by professionals in our industry. They equate delaying Social Security to an 8% return. By describing it that way, they undersell the benefits of an 8% increase in lifetime income. It's much more beneficial than an 8% "return."


So, in the wife's case, she might want to wait because she's in a better position than the typical person delaying to 70 who doesn't have access to a survivor benefit. The typical person gives up all benefits until they reach 70 to get that bigger benefit. She can collect her survivor benefit while waiting, making the cost of delaying so small that it's usually very attractive for her to delay all the way to 70. She receives her survivor benefit while getting all of those delayed retirement credits for herself, then switches to her own benefit and collects that larger benefit for the rest of her life.


I'm just throwing that out there. I don't have any exact numbers to say how much of a difference this option would make. However, when people have access to a survivor benefit, it's far more common for them to claim just the survivor benefit first and then wait to collect their own at 70 rather than at their FRA. The cost of gaining those delayed retirement credits is so greatly reduced because they're collecting the survivor benefit instead of collecting zero, which is what typically happens.

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