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I TURN AGE 62 IN January—which means I could claim Social Security retirement benefits and perhaps collect at least a few monthly checks before I succumb to cancer.
But is that the smartest strategy? One of my top priorities is ensuring Elaine is financially comfortable after I’m gone, so I want to make sure she gets as much from Social Security as possible.
We got married in late May, a few days after I was told I had lung cancer that had metastasized to my brain and elsewhere. We were already engaged, but we moved up the wedding by two weeks when I got my diagnosis.
By itself, getting married doesn’t ensure that Elaine will be entitled to Social Security survivor benefits based on my earnings record. Instead, I also need to live another nine months after our wedding date. Initially, that didn’t seem like a sure thing.
After four months of chemotherapy and immunotherapy, my prospects seem better, though still not great. Twelve days ago, a scan turned up a pulmonary embolism, and I’m now on blood thinners. But assuming l make it to late February 2025, and thus Elaine does indeed qualify for survivor benefits, what’s the best claiming strategy?
I wanted to make sure I got it right, so I ran my thoughts past Mike Piper of ObliviousInvestor.com. Mike is the brains behind Open Social Security, the free online calculator, and author of Social Security Made Simple.
What makes the claiming decision so tricky? Not only are the rules complicated, but also widows and widowers have unusual flexibility when it comes to Social Security. They can start their own benefit based on their own earnings record and then later swap to survivor benefits. Alternatively, they can go the other way, beginning with survivor benefits and then later claiming their own benefit.
Which is the better strategy? It’ll vary from couple to couple. Here are the two scenarios that I analyzed for Elaine:
Strategy No. 1: Elaine claims survivor benefits upon my death and then applies for her own benefit at age 70.
Widows and widowers can receive survivor benefits as early as age 60, or age 50 if they’re disabled. But they take a haircut for claiming survivor benefits before their full Social Security retirement age, which is age 67 for both Elaine and me.
Let’s assume Elaine, who’s a few years younger than me, is 62 when I die. Because she’d be claiming survivor benefits five years before her full retirement age, her survivor benefit would be some 80% of my full retirement age benefit.
The good news: Elaine could later swap to her own benefit based on her own earnings record. Let’s say she does so at age 70, when her own benefit would be at its maximum. Her age 70 benefit would be an inflation-adjusted 25% larger than her survivor benefit.
What if I claim Social Security before I die? It’s tempting—and, to my surprise, it likely wouldn’t make much difference to the survivor benefit Elaine receives in scenario No. 1. If I take benefits during my lifetime, it would potentially cap Elaine’s survivor benefit at 82.5% of my age 67 benefit, not much different from where Elaine would end up if I didn’t claim benefits and she took survivor benefits at 62 or 63.
Still, I’ve decided not to claim early. Why not? For starters, if I apply for benefits in January, I’d likely “fail” the Social Security earnings test in 2025, meaning that my earned income next year will probably be sufficiently high that I’d be deemed ineligible for benefits. The earnings test applies to those who haven’t yet reached their full Social Security retirement age.
Would Elaine’s survivor benefit be increased to reflect the benefits I lost to the earnings test? That might happen—but there’s a limit to Social Security’s generosity. Remember, if I claim benefits, Elaine’s survivor benefit is potentially capped at 82.5% of my full retirement age benefit.
On top of that, if I claimed early, it would put the kibosh on strategy No. 2. How so? The crux of the second strategy is to delay survivor benefits until 67 to get 100% of my full retirement age benefit—and yet Elaine would likely be limited to 82.5%.
Strategy No. 2: Elaine claims her own benefit at 62 and delays survivor benefits until 67. There’s no point in Elaine delaying survivor benefits beyond her full retirement age of 67, because—unlike benefits based on your own earnings record—you get no boost in survivor benefits for postponing beyond that age.
How would strategy No. 2 play out? From 62 to 67, Elaine’s monthly benefit would be 30% less than in scenario No. 1.
Things look much better from age 67 on, when she swaps from her own benefit to survivor benefits based on my earnings record. That benefit would be equal to 100% of what I could have received at 67—and 79% higher than the benefit Elaine would collect from age 62 to 67.
In fact, that survivor benefit at 67 would be comparable to what Elaine would have received if she delayed her own benefit until age 70—the situation we considered in scenario No. 1. The reason the two benefits are similar: I had somewhat higher lifetime earnings.
Despite that, it turns out the better strategy is No. 1, where Elaine applies for survivor benefits upon my death and then swaps to her own benefit at 70. How much better is strategy No. 1? I calculate that, over her lifetime, it would leave Elaine roughly $27,000 ahead, figured in today’s dollars.
Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X @ClementsMoney and on Facebook, and check out his earlier articles.
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Jonathan – In our last annual wellness visit I told our family physician that if it’s late in December and I’m on a respirator to keep me on it until January 1st of the following year so my wife could file a joint income tax return for that year. I figure that will save her a couple thousand dollars in taxes and give her some time to sort things out. – Dave
As smart of an analysis of a tragic issue as you’ll ever find. Thanks Jonathan.
HD readers should listen to Jonathan’s interview with Christine Benz on the Long View podcast last week. Also an intelligent discussion of his family’s difficult issues. Link here. https://podcasts.apple.com/us/podcast/the-long-view/id1462214964?i=1000673196244
Many thanks MikeinLA for bringing this to HD readers’ attention.
It prompted me to, quite literally, triple dip, by also tuning into, one after the other, to Jonathan’s other interviews on the Long View. I have no doubt that fellow HD readers will also find this extremely worthwhile. Links follow.
“Jonathan Clements: ‘It’s in Wall Street’s Interest to Make Everyday Investors Think That They Are Stupid,’” The Long View podcast, Morningstar.com, July 31, 2019.
“Jonathan Clements: ‘Humility Is a Hallmark of People Who Are Financially Successful,’” The Long View podcast, Morningstar.com, Dec. 26, 2023.
Elaine may get remarried at some point. Would that change the calculation? There is not a standard period of mourning for a loss, and for her sake I hope she derives a bigger dividend of the heart over money as consolation.
As long as remarried AFTER age 60 it would be unaffected.
The best sentence in this article is “Let’s assume Elaine, who’s a few years younger than me, is 62 when I die.” Since you turn 62 in January (2025), and Elaine is a few years younger than you, that means you made it to early 2028 or so. That’s the most important, and much-preferred outcome, in this analysis!
Probably too optimistic on my part! But assuming Elaine was 62 made the analysis a little easier, because at 62 she’d have the choice of starting her own benefit, as well as having the option to begin survivor benefits.
Jonathan, I join Dan in hoping Elaine is at least 62 when making these decisions!
I’ve been wondering about this as I’m also 62 and my wife is five years younger. I was the higher earner.
I guess a similar analysis is required to see what her optimal choice will be. I don’t relish studying these rules.
As a start, I just ran a scenario in the Open Social Security calculator that assumes I die this month. The recommended strategy is for my wife to claim her own benefit at 62, then her survivor benefit at 67.
I may call that good enough on the analysis front. Would you think it probably is? I’ll perhaps redo it every year, along with saving/printing an SS summary every year as someone suggested earlier.
Thanks again for a thought and action provoking article.
Thanks Jonathan for keeping us informed and for working through the details so you can do the best you can for your family. Although it is difficult, reading your articles lets me imagine what you are going through. We pray for you. I was wondering if you could find out from Mike Piper if his calculator takes into account the scenario’s you talk about in this article?
To add to the confusion, full retirement age for survivor benefits is different than full retirement age for retirement benefits. In my case, my full retirement age for retirement benefits is 66 years and 10 months. Full retirement age for survivor benefits is 4 months earlier…go figure!
At the death, the survivor no longer has access to their spouse’s social security statement. I recommend to friends that they print and save a copy of their annual statement in case their spouse may need it.
No doubt determining the proper social security strategy is MUCH HARDER than it should be!
Thanks Jonathan for this extremely helpful article!
After my husband died, I went in person to the SS office and they printed out a table of his benefits for me. My FRA was 66 and 2 months, but for survivor benefits it was 66. I knew I wouldn’t have any SS benefits of my own and that the GPO would be a hit to Survivor benefits. That paper actually turned out to be super helpful in deciding what to do. So I took Survivor benefits at 66 since they wouldn’t get any higher.
It occurs to me that this kind of analysis lends itself to a table that compares the options. A well constructed table or graph can really help illuminate a decision. If I were home I would attempt to assemble one. Happily, I’m at Cunningham Park in Queens watching our 11 year old grandson’s double header.
I hope your grandson’s team finds an easier path to victory than Jonathan found with his SS double header!
Great article Jonathan. I think the real value is in demonstrating the evaluation process. The specific details matter greatly. The claiming decision is complex, but decide we must. It’s very helpful to see how others approach it, especially in a challenging situation. I’m sure you’ve done a great job of taking care of your family.
If I’ve learned anything from the past five months, it’s how much work is involved in making sure your estate is well-organized and your family is okay after your death. This isn’t something you can knock off in a weekend.
Of course, it’s only a problem if you have an estate, so perhaps a good problem. Too many people will likely take SS at 62 because they need the money.
And if they’re a widow or widower, they can indeed claim one benefit at 62 — and then their other benefit at a later age.
Meanwhile, even if you don’t have wealth to bequeath, it’s still paramount to have your affairs well organized. Cleaning up someone else’s mess is no fun, no matter whether the deceased was rich or poor.
True that. I’ve felt like we’re pretty organized on this front but have lately realized, maybe not as much as I thought. Your learnings are an eye-opener.
It is infuriating to me that the government has set up such a complex system that someone ‘in the know’ as much as Jonathan and others on this site have great difficulty figuring out something as basic as survivor benefit –let alone people who aren’t so financially savvy. Signing up for Medicare is equally bewildering. It is shameful that lawmakers and unelected bureaucrats have created systems so complex that countless citizens don’t receive what they are entitled to.
Agree with everything you said. And once again, since we’re on the topic, survivors have to be vigilant. As I’ve mentioned here before, Social Security mistakenly reclaimed Doug’s final check – the notice was the first piece of mail I received addressed to “The Estate of …”. He died in May, but the check they reclaimed was for his April benefit. Took me until July to get it back. Does every survivor know that Social Security payments are made in the month following the one for which you’re getting paid? I wonder how frequently this mistake is made and, if the survivor doesn’t notice, is it ever rectified? In better news, I just got an IRS refund from 2019, the last year that Doug did our taxes. I knew at the time that we were due one, but I can’t remember if we ever received it or if we did and this is another one. I’m not going to dig too deep just to satisfy my curiosity. I’m just very pleasantly surprised. Happy Saturday!
Government benefits have many rules and regulations. I was watching on PBS channel that low income seniors and women with children who are eligible for food stamps are not getting the benefits. They qualify for benefits, but they have difficulty assessing them. They don’t understand income guidelines, age and other requirements. This let them going hungry and malnourished for something basic as food stamps.
Actually, my reaction is the opposite. What a good job the actuaries did to make many of these decisions of so little consequence for most people. (in my evaluation, $23,000 amortized over 30 years, without inflation discounting the future payments is a difference that will not make a difference for most people.)
For those of us so inclined, the calculations are enlightening. But basically boil down to delay as long as able to increase benefits. And pay attention when two parties (or more if dependents are involved) have different economic situations.
We here love to get into the weeds. But most folks can’t/won’t. I am happy to see that for those dependent on Social Security, there are few traps, but a few self-inflicted wounds. Remember, most folks taking early are either forced to by sudden loss of income or inclined to because they mistrust everyone. Not much can be done to remedy either situation.
I think you’re right that for many people, especially lower income without retirement assets, the option of making a claiming decision is taken away from them. But the conclusions in an academic paper published by the National Bureau of Economic Research titled How Much Lifetime Social Security Benefits Are Americans Leaving On the Table?, indicate the decision is even more important for them. Here’s one of the conclusions: “There is a exceptionally large dispersion in lifetime-benefit optimization gains, ranging from several thousands [of] dollars to close to $900,000. The percentage remaining lifetime spending gains are higher, on average, for those with low incomes. Take the poorest 20 percent of 45 to 62 year-olds. Their median gain from SS optimization is 15.9 percent. And one in four of this group experience a 27.4 percent or larger increase in lifetime spending.”
This decision is a lot simpler if you’re single.
Thanks for sharing your thought process. Mike Piper’s book has been very helpful to me in my SS decisions. I recommend it to my friends who are 60 and older.
Chris and I married after 13 years of cohabitation for 3 reasons. In no particular order they were
1. So that Chris would become eligible for the survivor benefit, enabling her to retire earlier with her own reduced SS benefit.
2. So that I could be on her employer provided group health insurance, enabling me to escape the ever increasing cost of my own health insurance until I became eligible for Medicare.
3. Hmn, I know there was a 3rd reason……. Oh yeah, we’re madly in love.
It’s another example of the effect luck has had on our success. Chris and I were lucky that those first two items converged and motivated us to marry. Jonathan, our wish for you make it to your anniversary and a long time beyond.
I recently had to choose whether to take survivor benefits. I used Mike’s calculator and Maximize My Social Security, both of which gave the same advice. Thank goodness I used them because the reps at my local Social Security office gave me incorrect information.
You seem to view this as a long term investor.
Does strategy 1 also give Elaine her highest monthly income from your death forward?
Isn’t that far more important than $27,000 over 20 years or so in the future?
The $27,000 advantage accrues by the time Elaine turns age 70. As I explain in the article, the income generated by the two strategies is almost exactly the same from age 70 on.
Your last question seems odd. If there had been a strategy that generates a lot of income now but would leave Elaine with far less 20 years down the road, why would I ever suggest that?
What happens if the survivor remarries? Does the possibility of taking survivor benefits, or any ongoing benefits stop?
My own father remarried a wonderful woman after my mom passed when my parents were 67. Both my father and step mother are big into cycling and they have a great time together. It has been a fantastic second marriage for my Dad.
I didn’t know the answer, but Google pointed me here:
https://www.ssa.gov/policy/docs/workingpapers/wp89.html#:~:text=A%20widow(er)%20is%20eligible,years%20of%20age%20or%20later.
As long as Elaine is age 60 she can remarry and be unaffected. Another question- is Elaine eligible to collect on a former spouse?
No former spouses — at least for her!
Jonathan, thank you for this article. We have a family member with ALS, as you know from the forum, and they will be going through something similar to you and Elaine. You have helped more people than you know today, I am sure. I am still praying for you. Chris
Having been born in 1950, I had the option for taking 1/2 my wife’s SS benefit, when she turned 64 until I turned 70, which I did for 4 years. That gave us an additional $38K. Since I got retired at 59, it helped a great deal.
Well, that was easy to figure out. I’m beginning to think that we should have kindergartners run the government to hopefully make things simpler.
You’ve got that right. This is a crucial decision — and yet it took me far too long to figure out the right strategy.
I think you just answered one of two questions I came back to ask. That was whether you were able to do this just using the Open Social Security calculator. Sounds like that’s a no. Still a great tool of course.
My other question was to confirm your analysis assumed any benefits would be spent as taken, not considering investing them in some way. Sounds like it’s complicated enough without trying to do that.
Yes, the assumption is that the money would be spent. But imputing some modest real return to the payments from the two strategies wouldn’t make much difference to their relative value.
Great article. My first reaction is a feeling that advising my spouse on how to manage a portfolio after my eventual passing is easier than advising them on how to manage their social security choices.
Indeed, Mike. I think it’s likely for many couples that one partner has greater interest and know-how in doing the research and planning for Social Security (I found one of Doug’s worksheets that spelled out “If Doug dies” and “If Linda dies”), but the results of the decision should be shared and very explicit, both verbally and in writing. Ideal if adult children are also aware. Regarding portfolio managing, if the one left behind is the less savvy person, maybe they should spend the money to hire a financial planner. That advice should also be explicit. In my case, it was conveyed through an adult child which was a huge relief, and also to know the name of the firm that Doug trusted to guide me.