Death Benefits

Jonathan Clements · Oct 19, 2024 · 41 replies

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.

Want to receive our weekly newsletter? Sign up now. How about our daily alert about the site's latest posts? Join the list.

Death Benefits

More On This Topic