Losing a spouse at any time in life is difficult. However, losing a spouse while you are retired also presents some serious financial challenges. A recent article in Kiplinger, “Maximize Social Security benefits for surviving spouses,” explores the steps that a surviving spouse can take to make sure she is are receiving the most Social Security benefits possible. There’s a right way and several wrong ways to do this.
If you are widowed before claiming Social Security benefits, there are options to maximize Social Security payments by coordinating the timing of claims and survivor benefits.
If you don’t know about this, don’t count on Social Security to tell you about mixing and matching the benefits. A report issued early in 2018 by the Social Security Administration’s Office of the Inspector General found that as many as 82% of surviving spouses taking benefits could have received a higher monthly benefit by restricting their application to survivor benefits only and delaying taking their own benefits up to age 70.
Without restricting an application, a beneficiary eligible for both benefits receives the highest one to which they are entitled.
Not knowing about how to maximize survivor benefits, can put a big hole in monthly income. The report projects that the Social Security Administration underpaid about $132 million to more than 9,000 beneficiaries age 70 and older, and in the coming years it will underpay more than 2,000 additional beneficiaries who are under age 70 – by about $9.8 million, once they reach age 70.
Educate yourself about how this works. Surviving spouses need to consider whether they can make the most of their benefits by taking the survivor benefit first, and later switching to their own benefit, or by taking their own benefit first and then switching to a survivor benefit. The key factor to consider in this equation: How much either benefit can grow.
You can claim a survivor benefit as early as age 60, or age 50 if disabled. However, it is reduced, if it is claimed before the survivor’s full retirement age (FRA). It won’t grow past the survivor’s full retirement age. The most a surviving spouse will receive is 100% of the benefit the deceased spouse received or was eligible to receive at his death.
Run the numbers and do the math. Once you figure out which number will grow the most, you may want to delay that benefit. The amounts and the age you claim could make a big difference in the quality of your retirement.
Resource: Kiplinger (Aug. 7, 2018) “Maximize Social Security benefits for surviving spouses”
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