So often when I write or talk about Social Security benefits, I refer to the fact that actuarially, women are likely to survive their husbands. Consequently, many of my discussions of survivor benefits focus on widows.
But Social Security benefits are gender neutral. Surviving widowers have the same rights as surviving widows. That means if they are entitled to both retirement benefits on their own work record and survivor benefits based on their late spouse’s earnings, they can choose when and how to receive those benefits.
Think of retirement benefits and survivor benefits as two separate pots of money. You can claim one benefit now and switch to a different benefit later if it would result in a bigger benefit.
Garry Patrick, a Certified Financial Planner from Englewood, Co., had a question about one of his clients, a soon-to-be 65-year-old man who was recently widowed. The man is not yet collecting Social Security retirement benefits, but his wife, who was 71 years old when she died last month, was. His retirement benefit is larger than hers.
Mr. Patrick’s question: Can the widower file for survivor benefits now and switch to his benefit at age 70 to maximize his benefit?
Yes. Mr. Patrick’s client can claim survivor benefits now, but they would be slightly less than the amount that his late wife’s received because he would claim them before his full retirement age of 66. It he filed for survivor benefits now, he would get about 95% of his wife’s monthly benefit.
For survivors born from 1945 through 1956, their age for full survivor benefits is 66. They can collect benefits as early as age 60, but benefits are reduced by .396% per month for every month they collect benefits before their full survivor benefits age. (Note: these birth years for full survivor benefits are slightly different than the birth years for full retirement benefits which is 1943 through 1954).
Mr. Patrick’s client can continue to collect survivor benefits while he defers collecting his own retirement benefits until age 70. His retirement benefits will accrue delayed retirement credits worth 8% per year for each year he postpones claiming benefits between age 66 and 70. Survivor benefits do not accrue delayed retirement credits.
Therefore, Mr. Patrick’s client can collect a survivor benefit now and switch to his owner larger retirement benefit—including four years’ worth of delayed retirement credits—at age 70. That will boost his retirement benefit to 132% of his full retirement benefit at age 66, creating a larger base amount for future annual cost-of-living adjustments.
But, if he is still working, he may be subject to the earnings cap, which penalizes individuals who collect any kind of Social Security benefits—whether retirement, spousal or survivor-- before their full retirement age while they continue to work.
In 2013, individuals lose $1 in benefits for every $2 earned over the limit of $15,120. Once they reach their full retirement age, the earnings cap disappears, meaning they can continue to work while receiving Social Security benefits with no restrictions on their earnings.
Benefits forfeited to the earnings cap don’t disappear forever. They are merely deferred. The Social Security Administration will recalculate your benefits once your reach your full retirement age to account for those lost benefits.