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Widows and Widowers: What to Know about Social Security

Mary Beth Franklin reviews the options available to surviving spouses when their partner pre-deceases them.

Widows and Widowers: What to Know about Social Security

Christine Benz: Hi, I'm Christine Benz for Morningstar.com. Widows and widowers have a number of options when it comes to claiming Social Security benefits. Joining me to discuss that topic is InvestmentNews contributing editor Mary Beth Franklin. 

Mary Beth, thank you so much for being here. 

Mary Beth Franklin: Thanks for inviting me, Christine.

Benz: Important topic here: the options that are available to surviving spouses when their partner pre-deceases them. Let's start by talking about how long you have to make a decision about what you're doing, what type of benefit you're claiming.

Franklin: Well, let's assume husband and wife are currently married and the husband dies. What are you entitled to and when? Of course, it depends on the circumstance. Let's say, I am a working woman with retirement benefit of my own, I've not yet claimed, and my husband died without claiming benefits. Now, I have a choice. I can choose to collect my own retirement benefits and survivor benefits later or vice versa. Survivor benefits are available as early as age 60, but they're permanently reduced if I claim them early compared to my full retirement age of 66. My retirement benefits are available as early as 62, reduced benefits versus full at my full retirement age.

I would say, if I am a woman with a significant retirement benefit of my own, I may want to claim my survivor benefit first. It's worth the maximum amount if I claim it at my full retirement age. But it doesn't get any bigger. It doesn't grow by 8% a year.

Benz: In contrast with your own benefits.

Franklin: Correct. My own retirement benefit is going to grow by 8% a year. For someone who has a substantial retirement benefit of their own, they may want to collect their survivor benefit at their full retirement age, collect that for four years, and at 70 if their own retirement benefit is larger, because at that point it would have earned four years of delayed retirement credits--

Benz: Right. Which can be really, really valuable.

Franklin: --Exactly. Then you would switch. Well, let's say, we have a different situation. Maybe a stay-at-home spouse who has maybe a spotty work history of her own. And she's not working right now, husband dies, she probably needs money. In that case, her survivor benefit is probably going to be the bigger benefit of the two. But we want to maximize that. So, we want her to wait until her full retirement age to get that. In the meantime, let's say, she's 62. She could collect her own reduced retirement benefit now …

Benz: On her own work history.

Franklin: On her own work history. And even though it would be permanently reduced, her retirement benefit, if she waits till her full retirement age to switch to survivor benefits, it will not reduce her survivor benefit. So, she could collect her own reduced retirement benefits first up to her full retirement age, and then switch to full survivor benefits. Now, a survivor benefit is worth 100% of what my late husband was either collecting at the time of his death or entitled to when he died if he died before claiming.

Benz: So, lots of different variables in the mix. Where do you recommend that people get more information? I know that you've certainly written so much on this topic. But for people who want to try to find some customized guidance based on their own situation, where would you recommend that they go?

Franklin: I would say start with the Social Security website, which is ssa.gov. And in the search box, put widow or survivor and you'll come up with several, believe it or not, easy to read brochures that do lay out the different circumstances and when you might want to claim. And other things to keep in mind; if you're a young widow with young children, maybe you're below age 60; if your husband has died and you are caring for his children, and they are under age 16, you as the caregiving spouse regardless of your age may be eligible for survivor benefits.

Benz: The children as well?

Franklin: Children will get them up until age 18. You will get them up until the youngest child turns 16. Now, the thing to keep in mind for all of this is, if you continue to work and have earned income from a job, then your ability to claim any type of Social Security benefit before your full retirement age may be limited.

Benz: Let's talk about divorced spouses, divorced ex-spouses, where the ex-partner pre-deceases someone. What are the options available regarding Social Security claiming strategies at that situation?

Franklin: This is so important for divorced spouses to realize, that if they were married at least 10 years, divorced, and in most cases, currently single, they may be able to collect survivor benefits on their ex. A lot of people falsely assume that when they got divorced, they gave up their right to their mates' survivor benefits. That's completely untrue. You cannot give up your rights to a survivor benefit. So, if your ex dies, just as if you're still married, you're entitled to a survivor benefit. If you collect it at your full retirement age, it's worth 100% of what he or she was collecting or entitled to collect at time of death. So, very important. 

And the reason I want people to be aware of this is about a year ago, the Social Security Administration's inspector general's office, which is an internal audit, did a random survey of the type of advice that Social Security representatives were given what they call a "dually entitled beneficiary," someone who had a retirement benefit, and also a survivor benefit. That report found that in 82% of the cases, the Social Security rep gave the wrong advice. So, you want to make sure, particularly if you're entitled to two benefits, to know that you may be able to collect a survivor benefit first, and switch to your bigger retirement benefit later. Or in different circumstances, collect your own reduced retirement benefit first, and full survivor benefits later.

Benz: Mary Beth, let's talk about why this is really important for women especially.

Franklin: This is critical for women because here's the sad statistics. Seventy percent of married women will be widowed. The average age of a widow is 59 years old, which is pretty surprising--we think of the 85-year-old widow.

Benz: Exactly. No, that's young.

Franklin: And this may be, depending on the couple's financial planning, it might be the only source of guaranteed income for the rest of her life that she will ever get. So, it's extremely important for married women to be aware of what their potential Social Security benefit will be, whether they are married at the time of their husband's death or divorced when their ex-spouse dies. 

And I do joke that while a married woman is going to know pretty soon what her options are through Social Security, an ex-spouse wouldn't. So, you might want to stalk the ex on Facebook just to find out if he's still around.

One other point. If I am collecting a Social Security benefit at the time my husband dies and any part of my benefit is based on his earnings record because he was the bigger earner, if he dies, my existing Social Security benefit is automatically going to convert to a survivor benefit. But if I am not yet claiming Social Security benefits and my husband dies, I'm going to have to claim that benefit. And that's where I have the situation, I may be able to choose which benefit to claim.

Benz: You can make that decision. You are a font of wisdom on this topic. Thank you so much for being here, Mary Beth.

Franklin: Thank you for giving me a soapbox.

Benz: Thanks for watching. I'm Christine Benz for Morningstar.com.