Received from a recent attendee at our Social Security Planning for Women Seminar last Saturday:
Q: A friend who passed away recently. He did not claim his benefit until he was 70, and his benefit was $2,767 per month. His wife is 63 and had claimed her own benefit at 62. She does not want to wait until she turns FRA to claim her survivor benefit because she needs the money now. The SS office has told her that her benefit would be 82% of his and are telling her that her benefit will be $1,868 (I may be few dollars off in either direction). When the wife told me what her benefit would be, I thought it sounded kind of low since I knew the husband’s benefit was $2,767. Since the surviving spouse is 63 years old now (and claiming the survivor benefit now), shouldn’t her survivor benefit be 85.75% of his $2,767, or $2,372? Even the 82% figure they are telling her would be $2,268. Am I seeing this correctly? What should I advise her to do?
A: You are right. Her survivor benefit should be 85.75% of $2,767, or $2,372. There is tremendous confusion about survivor benefits, especially among SSA workers. Thankfully, they are not the ones who compute the benefits. They just take the applications and the system computes the benefit. If your client is adamant about starting her survivor benefit now, she should go ahead and apply. She should receive the correct amount. Please get back to me on this so we’ll know for sure that SSA workers are not computing incorrect survivor benefits.
Follow up from a recent SS question email: I received this message from my client below.
Turns out she is good. I had forgotten that she would still get her benefit and the survivor would offset what she is currently receiving. Thanks for the help!
Just got off the phone with SS. OK, they are telling me that I will receive $1859.60 from Ray’s SS, $571.00 from mine, which will total $2430.06 monthly. I signed papers for the $1895.60, and thought that was all that I was getting. Thank you for looking out for me.
Q: During a recent Social Security consultation I was asked the following hypothetical question: Wife begins collecting her own reduced benefit at age 62. Husband is the same age and plans on filing and suspending at age 66. If, when the wife is age 64, the husband dies and she decides to collect her reduced survivor benefit, will her own benefit still increase and if so, what are her options? I believe if the husband dies within 1 year of the wife collecting her own reduced benefit, the best strategy would be for her to possibly repay SS her own benefit back and allow her benefit to grow while she collects her reduced survivor benefit. Since the wife is 64 and has already been collecting her own benefit for 2 years, does she now need to wait until FRA to restrict her application to her survivor benefit in order for her own benefit to be eligible for delayed credits?
A: To answer your last question first, if the wife starts her benefit at 62, she may NEVER file a restricted application for the survivor benefit and her own benefit will NEVER earn delayed credits. The only way she could receive a survivor benefit while her own benefit earns delayed credits is for her to file for the survivor benefit first. She must not open her own record.
You may be right that withdrawing and repaying is the right strategy if the husband dies within the first year of the wife collecting her own reduced benefit. It depends on whether her maximum benefit if claimed at 70 would be more than the survivor benefit. Otherwise she should claim the maximum survivor benefit at 66.