Welcome to our “Social Security Q&A” series. You ask a question about Social Security, and a guest expert answers it.
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Today’s question comes from Jeff:
“I am 58 years old. My wife passed away a year and a half ago. We were married for 34 years.
I retired from teaching last May. If I claim a Social Security survivors benefit on her record at 60, will that affect my Social Security retirement benefit when I am ready to take mine? Given my birth year, my full retirement age (FRA) is 67. I am hoping to delay claiming my own retirement benefits until age 70.”
When should you claim survivors benefits?
Jeff, I have good news for you. You can indeed claim widow(er)s benefits — one type of survivors benefit — as early as age 60 without having any negative effect on your retirement benefits. Alternatively, you can claim your retirement benefits as early as age 62 without having any negative effect on your widow(er)s benefits.
Keep in mind that claiming widow(er)s benefits at age 60 involves a steep early claiming penalty of 28.5%. Nevertheless, it is often worthwhile to accept that penalty and claim at age 60 (assuming you will switch to retirement benefits later on).
Jeff, you do have the option of claiming retirement benefits first. So, which benefit should you claim first? The answer partly depends on the earnings test, which we will ignore for the moment. (In Jeff’s case, he retired at age 58, so the earnings test is irrelevant.)
In many instances, the answer is obvious: If retirement benefits are significantly larger (say, at FRA) than the widow(er)s benefits, then claiming widow(er)s benefits at age 60 makes good financial sense. The next move would be to switch to retirement benefits at age 70 or thereabouts.
Alternatively, if widow(er)s benefits clearly dominated retirement benefits at one’s FRA, then the best move would be to claim retirement benefits at age 62, and then switch to widow(er)s benefits at FRA. That is because widow(er)s benefits reach a maximum at FRA.
As widow(er)s benefits (at FRA) grow closer to retirement benefits (at FRA), the choice of which benefit to start first becomes more complicated. I do not see any easy rule-of-thumb that can deal with cases of this sort. One really needs to do some careful calculations or turn to some inexpensive professional advice to reach a reliable conclusion.
Finally, for those who continue to work past age 60, the earnings test will play a role. For 2021, earnings above $18,960 result in a $1 reduction in benefits for every $2 in earnings (a higher limit applies for the months leading up to one’s FRA).
So, anyone with significant earnings will find their benefits reduced substantially, perhaps to zero. This fact further complicates the decision about the timing of claiming benefits.
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I hold a doctorate in economics from the University of Wisconsin and taught economics at the University of Delaware for many years.
Disclaimer: We strive to provide accurate information with regard to the subject matter covered. It is offered with the understanding that we are not offering legal, accounting, investment or other professional advice or services, and that the SSA alone makes all final determinations on your eligibility for benefits and the benefit amounts. Our advice on claiming strategies does not comprise a comprehensive financial plan. You should consult with your financial adviser regarding your individual situation.
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