In today’s column, I present emails from two women. They have two things in common. They are both around age 66. And they are both widows. But there is one key variable. One woman was a stay-at-home mom most of her life. The other worked outside the home. And that makes for a big difference in their Social Security stories.
Q: I am about to turn 66 and have finally decided to take Social Security. I have been living off of savings and investments until now.
I was planning to file for widow’s benefits off my deceased husband’s record. He died several years ago. He was a banker who made good money and has a very high Social Security benefit — $2,500 per month. I worked for about 15 years very early in my marriage. So I am due a very small Social Security retirement benefit on my own record. The last time I checked, it was $400.
When I went to my local Social Security office, they tried to make me file for my own retirement benefits, and then they said I could also get some money from my husband. I told them I just wanted widow’s benefits. They wouldn’t let me do that, so I left in disgust. What can I do about this?
A: Before I suggest what you can do, let me explain how things work for a person in your situation.
The Social Security Administration would normally recommend that you file for your own retirement benefits first. So they would start out by paying you that $400 rate. Then they would also take a claim for widow’s benefits, and with that, they would supplement your own retirement up to 100 percent of your husband’s rate. In other words, you would get $2,100 on his account to go along with the $400 on your record, taking your total benefits up to the $2,500 rate you’d normally be due on your husband’s record.
So why do they bother taking two claims? One reason is that years of experience has taught them that most people like the idea of having at least part of their Social Security check come off of their own work record.
And the other reason is simply administrative, and frankly, a little self-serving. You see, a Social Security office gets credit for each claim it takes. And the more claims an office takes, the more staff they get. If I were the manager of the office you went to, I would tell my clerks to try to talk you into filing two claims.
Having said that, you have every right to insist on filing only for widow’s benefits. But I hope you see it really doesn’t matter if you file one claim or two. Either way, you are going to get a check for $2,500 deposited into your bank account each month.
Also, though this might upset you, I want to point out something for other people in a similar position. Because you haven’t been working, you could have filed for your own reduced retirement benefits back when you were 62 years old. Then at 66, you could have filed for the higher widow’s benefits on your husband’s record. You’ve sadly thrown away thousands of dollars by not doing that. Maybe you didn’t do that for tax reasons? Whatever the reason, it’s too late now.
And before I move on to the next email, I must make one final point. I can hear lots of my readers saying, “Tom, I thought you said a wife can’t take reduced retirement benefits at 62 and switch to higher spousal benefits later on. What gives here?” What gives here is the fact that this woman is a widow. A wife (with a living husband) generally can’t make that switch. But a widow can.
Q: I was 66 years old four months ago. I was planning on delaying filing for Social Security until age 70, but recently changed my mind. I have worked most of my life and plan to continue working indefinitely. I am a widow. Social Security records say my full retirement age benefit is $2,340 per month and that my husband’s rate is $2,510. How do you think I should handle my Social Security?
A: You should take widow’s benefits now and let your own benefits continue to grow until age 70.
So at age 66, you would start getting $2,510 per month from your husband’s account. You are eligible for those benefits even though you still continue to work full time because the earnings penalty rules (that are too complicated to explain here but that I have discussed countless times in other columns) go away once you reach your full retirement age. You could be making a million dollars per year and you’d be due your full Social Security benefits with no penalties imposed.
Also, you should claim four months of retroactive benefits back to the month you turned 66. The reason you can claim retroactive benefits while the woman who sent the first email can’t is because the law says no retroactive benefits can be paid before your full retirement age. She is about to turn 66 and I told her she can’t get any past benefits (which she would have been due had she filed earlier) because again, those benefits can’t be paid before age 66. You are age 66 and four months, so you can get those four checks paid to you retroactively.
And because you will be delaying your own retirement benefit past your normal full retirement age, you get a two-thirds of 1 percent credit added to your retirement payment rate for each month you don’t file for those benefits. That comes out to a 32 percent increase if you wait until age 70 (the maximum age you can delay signing up for retirement benefits). In other word, at age 70, you will stop your widow’s claim and file for retirement benefits and start getting about $3,088 per month.
And the reason you can do this and the woman in the first email can’t do this is because her own retirement benefit is so small. It was $400 per month. If she delayed filing for her benefits until age 70, it would increase to $528. And that’s well below her widow’s rate of $2,500.
