Content starts here
CLOSE ×
Search
Reply
Contributor

Surviving spouse - what are her options in these situations?

I am 68 years old and have delayed taking Social Security. Spouse is 64. She doesn't qualify for benefits, so she would be receiving a portion of mine when I pass. Would there be any difference in her benefit amount if I started receiving payments now vs. if I hadn't begun to receive payments at the time of my death? Also, if I began taking benefits now and subequently passed away, could my surviving spouse decline payments until she reachers her FRA of 67, and then receive the maximum benefit?

Thanks so much!

 

 

0 Kudos
4,619
14
Report
Bronze Conversationalist

@HarlanM149937 As Gail pointed out, your Spouse is currently eligible for Spousal Benefits. She is eligible for Survivor Benefits should you predecease her. Without your birth dates and your Primary Insurance Amount (PIA), I will provide you a hypo of her Spousal Benefit that would be payable currently if you apply for your SS Benefits. At her age of 64, she is 3 years younger than her Full Retirement Age (FRA). So, her current reduction is 25% (25/36 of 1% or approximately .69444% per month). If your PIA was $1,800/month at FRA which, if you were born in 1956, was age 66 years 4 months, her Spousal Benefit will be $675/month ($1,800 X 50% X 75%). If she waits 3 years to age 67, she will receive $900/month or $225/month more. However, she losses $24,300 ($675 X 36 months) waiting. It will take 9 years to recoup ($24,300 divided by $225/month = 108 months). In addition, your PIA will increase due to Delayed Retirement Credits (DRC). The increase is approximately .00666 per month or about $12.00 per month which is 8% per year. If your birth date is February 1956, you have accrued 20 months of DRCs or about $240 per month. So, your PIA will be $2,040 per month. Remember, I used a hypo $1,800 for your PIA at FRA and have rounded to illustrate the approximate current amount of SS Benefits available for you and your spouse ($2040 plus $675 or $2,715) which amounts to $32,580 per year or about $65,160 should you delay for 2 more years. Because $65,000 is quite a sum of money, I suggest you schedule an appointment with the SSA and obtain exact amounts so you may be able to determine when it may be optimal to start you and your spouse's SS Benefits. Essentially, you are accruing DRC at 8% per year, but losing spousal benefits at 37.5% of the amount of your PIA at FRA. Survivor Benefits upon your death are a different calculation.

0 Kudos
4,522
6
Report
Social Butterfly

Read More
0 Kudos
4,397
5
Report
Bronze Conversationalist

@fffred Based on Harlan's questions, it is a two (2) year period unless he is planning to delay starting SS Benefits past age 70. As you know, there is no financial benefit for delaying past age 70. It is not clear if Harlan is asking about Spousal Benefits, Survivor Benefits, or both. Because he did indicate "her benefit amount" if he started receiving payments now (February 2024), I used a hypo $1,800 SS Benefit at FRA. We do not know their birth dates. I used February 1956 for Harlan (age 68) and February 1960 for his spouse (age 64). Because Harlan attained FRA at age 66 years 4 months, he has accrued 20 months of Delayed Retirement Credits (DRC) or about $240 per month. His SS Benefit is $1,800 + $240 or $2,040 per month. Because he starts his SS Benefits now, his spouse may start Spousal  Benefits now based on Harlan's PIA at FRA or $1,800 reduced by 50% and an early reduction of 25% (36 months X .69444) or $675 per month. So, Harlan and spouse are eligible now for $2,715 per month or $32,580 for one year and $65,160 for two years. If we looked back to the point in time when Harlan attained FRA, the amount will be greater than $65,160. Remember, they are collecting zero currently and need to live at least average life expectancy or longer to recoup the amounts they elected to delay. Hopefully, this will work out for them. This is why I suggested they schedule an appointment with a SS Representative and obtain accurate SS Benefit amounts.

0 Kudos
4,321
4
Report
Social Butterfly

@Tonster521 

 


So, Harlan and spouse are eligible now for $2,715 per month or $32,580 for one year and $65,160 for two years. 

Okay, so you are just taking the two years worth of total benefits beginning with he taking benefits at age 68.

 

I assumed you were recalculating benefits as if he would start in 2 years when he is 70. Sorry for the confusion.

 

Although I guess it is my myopia that I don't see how "2 years' worth of benefits" is helpful to this analysis.

 

Again, I would urge anyone who is weighing more than one SS claiming approach to crunch the numbers and the least painful way to obtain this is through the use of software, and I especially suggest using the free, web-based opensocialsecurity.com site (feel free to suggest alternates).

0 Kudos
4,266
0
Report
Contributor

To clarify: My wife will be turning 64. I am 68. She doesn't qualify for and SS benefits of her own. She will receive my benefit when I pass.

 

0 Kudos
4,299
2
Report
Social Butterfly

@HarlanM149937 

 

Thank you for the clarification. Previously, based on Tonster's assumption that you were born in Feb, 1956 and your wife born in Feb, 1960 I ran your situation (with Tonster's assumed $1800 PIA) in the software I mentioned, opensocialsecurity.com (I have no relationship to them other than a user and enthusiast). If I remember correctly, the "best" claiming strategy was for you to claim at 70 and your wife to claim spousal at 66 (okay, I just took a minute to run this again and confirm).

 

I suggest try running this program yourself. The website is very informative regarding SS rules and claiming strategies. You can also enter your own desired claiming dates to check how that turns out.

 

Good luck!

0 Kudos
4,260
1
Report
Bronze Conversationalist

@fffred Many of the software programs use longevity factors that for most folks are not realistic. The "Open Social Security" program applies a probability weighted annual benefit to age 115. How many folks live past age 90? 

I ran the age 70/spouse 66 and the age 68/spouse 64 (start SS Benefits now) and the difference in present value was $7,692 using probability weighed annual benefits to age 115 which is de minimis over a 45 year period of time. Essentially, Harlan and his spouse would forgo approximately $65,000 over the next two years (starting SS benefits mow) and try to recoup that amount over the next 43 years. I think many folks would opt for the $65,000 over the next two years by starting their SS Benefits now. If Harlan's spouse had Old Age (Retirement) Benefits, there would be a different strategy.     .

0 Kudos
4,195
0
Report
Honored Social Butterfly

Read More
0 Kudos
4,596
6
Report
Contributor

Thank you for the helpful response. One other question. Can the surviving spouse elect to stop receiving the deceased's benefit upon his passing, and wait to resume until she reaches her FRA, thus maximizing her benefit?

0 Kudos
4,589
5
Report
Social Butterfly

Read More
0 Kudos
4,489
4
Report
Bronze Conversationalist

@fffred I agree that every situation needs to be reviewed separately. Also, longevity or the lack thereof (death) is an important time factor when trying to develop an optimal SS strategy whether Old Age (Retirement) or Survivor Benefits. You may be aware that the SSA uses two different approaches when developing the above SS Benefits. First, when someone starts Old Age benefits before attaining FRA, the Primary Insurance Amount is actuarially reduced so that based on an average life expectancy, the reduced benefit and the FRA benefit are actuarial equivalents. So, regardless of when someone starts, all  of the amounts provide the same amount of benefits based on average life expectancy. The key word is "average" as opposed to "individual". For many folks this concept is difficult to understand. The reduction factors are 5/9 of 1% for the first 36 months or .00556/month (6.67%/year) and 5/12 of 1% for months greater than 36 months or .00417/month (5.04%/year). For someone who attains FRA at age 67, starting at age 62 is about a 30% reduction. Second, if that person is a Survivor (male or female), the reduction is about .00339/month (4.07%/year). At age 62, the Survivor reduction is only about 20%. This is a huge subsidy in the Survivor provisions and not an actuarial equivalent. So, a $2,000 FRA gets reduced to $1,600 which is $19,200/year or $96,000 over the 5 year period. The survivor would need to live about 20 years to age 87 to recoup the $96,000 at $400 per month if the Survivor elected to wait to FRA (age 67) to start Survivor Benefits. I do not know if there is some sort of study that supports why a Survivor will get paid more than the Wage Earner. https://www.ssa.gov/benefits/survivors/survivorchartred.html#h3

0 Kudos
4,442
2
Report
Social Butterfly

Read More
0 Kudos
4,368
1
Report
Bronze Conversationalist

@fffred I am not sure if the reduction percentages for Spousal Benefits and Survivor Benefits are actuarial. Spousal Benefits are available at age 62 whereas Survivor Benefits are available at age 60. For a spouse (FRA age 66), the reduction percentages at age 62 are about 30% for Spousal Benefits and only 20% for Survivor Benefits. That is significant if the spouser has not attained FRA. If course, it is moot if the spouse is FRA or older. 

As you know, there are several approaches that folks may take with their SS Benefits. Some focus on the monthly benefit and others on the total benefits payable. For the folks that have the wherewith all to elect a strategy, delaying SS Benefits after FRA to obtain greater SS Benefit may not provide more total benefits. That person needs to live longer than the average life expectancy which the SSA tells us is somewhere between ages 83 and 84. This is gender neutral.I will try to link the SSA's Actuarial Life Table https://www.ssa.gov/oact/STATS/table4c6.html I believe a person can develop their strategy by using a range of realistic ages (i.e., 80,85, 90, etc.) based on their health status, family longevity, sibling's longevity, and sometimes just luck. Just using simple math without any other health/longevity input, a person at FRA age 66 with a SS Benefit of $2,000/month or $24,000/year may receive $408,000 for 17 years (using age 83). If that person delays to age 70, they will receive $2,640/month or $31,680 for 13 years or $411,840. So, the point of equality in time may be a couple of months prior to age 83. This is important because some folks believe they are receiving maximum SS Benefits from age 70. Using my example, at that point in time, they are down 4 years of SS Benefits or $96,000. There are a number of options ranging from investing to annuities to life insurance to staying with the SS Program and hoping the SS Program stays intact. 

0 Kudos
4,159
0
Report
Contributor

These replies are pure gold, and I cannot thank you all enough. I think these questions are fairly universal, but the answers are not always readily available. I am going to study the responses in detail before taking the plunge. Thanks again.

 

0 Kudos
4,485
0
Report
cancel
Showing results for 
Show  only  | Search instead for 
Did you mean: 
Users
Need to Know

"I downloaded AARP Perks to assist in staying connected and never missing out on a discount!" -LeeshaD341679

AARP Perks

More From AARP