Did you ever notice how some things come in threes? Recently I received similar questions from three readers asking how much a widow would receive in Social Security survivor benefits if her husband died before age 62 — the earliest age to qualify for retirement benefits.
It's a great question and the answer may surprise you.
One financial adviser asked about a client where the wife, who is 66, is already collecting her own Social Security retirement benefit of $1,058 per month. Her younger husband recently died at age 61 before collecting any benefits. His full retirement age benefit was $2,112 per month. His reduced benefit at 62 was $1,584 per month.
The adviser asked: “If she claimed her widow's benefit now, which amount would she receive? Would she collect the full retirement age amount of $2,112 or the reduced early retirement benefit of $1,584?”
In most cases, the survivor benefit amount is based on the worker's full retirement age, even if he or she died before reaching that age. But the amount the widow actually would receive is determined by her age at the time of claim.
So the short answer is the survivor benefit for this widow, who is already full retirement age, would be worth 100% of her deceased husband's full retirement age benefit, even though he died before reaching full retirement age. However, if the deceased worker had begun collecting reduced retirement benefits early, the maximum survivor benefit would be based on that reduced amount.
Another adviser asked about a surviving divorced spouse in a similar situation. “I understand that the survivor benefits are 100% if the surviving divorced spouse waits until full retirement age to claim them, but 100% of what number if the ex-spouse dies before his full retirement age or even before at age 62?”
The same rules apply to divorced surviving spouses who were married to the deceased worker for at least 10 years, as long as the surviving spouse is currently unmarried. However, once she claims survivor benefits, she can keep them even if she remarries — as long as she is at least 60 years old when she takes that second trip down the aisle.
A widow or widower can collect survivor benefits as early as age 60 (50 if disabled), but benefits are reduced a fraction of a percent for each month they are claimed before full retirement age. The amount is smaller to take into account the longer period a person receives them.
Note, the full retirement age for claiming survivor benefits may be different than the age for full retirement benefits. For example, the age for full retirement benefits is 66 for anyone born from 1943 through 1954. But for survivor benefits, 66 is the starting age to collect full benefits for anyone born in 1945 and 1946.
At the earliest claiming age of 60, or 50 if disabled, a surviving spouse is entitled to 71.5% of the deceased worker's full retirement age benefit (assuming the deceased worker did not collect retirement benefits early). At 66 or later, the surviving spouse would receive 100% of the deceased worker's full retirement age benefit.
A third adviser wrote: “If a worker passes away at age 61 and his surviving spouse waits to claim until he would have been age 70, does the deceased spouse's benefit earn delayed retirement credits?”
No. The maximum survivor benefit is worth 100% of the deceased worker's benefit if the surviving spouse claims it at full retirement age or later. But it never grows any larger. However, a retirement benefit continues to earn delayed retirement credits worth 8% per year for each year benefits are postponed beyond full retirement age up to age 70.
So if a widow or widower is entitled to survivor benefits and also qualifies for retirement benefits on their own earnings record, they can switch to their own retirement benefit if it is bigger as early as age 62 or as late as age 70. Here's a planning tip: In most cases it would make sense to wait until age 70 to switch to the maximum retirement benefit.