Dear Rusty: My husband is taking retirement next year and we went through the application process yesterday. No surprises until we found out that his delayed benefits do not apply to spousal benefits. His whole purpose of delaying retirement was to maximize benefits for me in case of an unexpected death (isn’t death most of the time unexpected?). I have been reading and preparing for this retirement for several years, and I have never come across this information. I personally would like to have known this before now. If it has been covered in your column, I missed it. Anyway, I have found your column most informative. Thank you. Signed: Upset Spouse
Dear Upset Spouse: It’s true that the question of delayed retirement credits and whether they apply to spousal benefits and/or survivor’s benefits is widely misunderstood. Delayed retirement credits, or “DRCs”, are accumulated when one delays claiming Social Security retirement benefits until after their full retirement age. DRCs are earned at the rate of 2/3rds of 1% for each full month of delay, or 8% per year of delay. At age 70 that can mean a benefit amount as much as 32% higher if your full retirement age is 66. DRCs don’t accumulate after age 70.
The confusion for many comes from believing that the living spouse of the person delaying will be entitled to a spousal benefit based upon the amount increased by DRCs, which is not true. Benefits for a living spouse are based upon the other spouse’s full retirement age benefit, not the increased benefit earned by delaying past full retirement age. Simplified, if you have reached your full retirement age when you claim your benefit as a living spouse you will get 50% of your husband’s “primary insurance amount”, which is the amount he was due at his full retirement age, not his DRC-increased benefit amount at age 70.
Survivor’s benefits, on the other hand, are based upon the DRC-increased benefit amount, so if your goal is, as stated, “to maximize benefits in case of an unexpected death”, then you and your husband have achieved that goal. If your husband should predecease you and you have reached your full retirement age, you will get 100% of the increased benefit your husband achieved by waiting until he was 70 to apply (including all DRCs). If you claim the survivor’s benefit before you reach your full retirement age, that benefit will be actuarially reduced based upon the number of months earlier that you claim it, but you also have the option to delay claiming your widow’s benefit until you reach your full retirement age (FRA) and get the full 100% of your deceased husband’s benefit at his death. And, incidentally, your FRA as a widow may be a little less than your normal FRA. Please note too that the survivor’s benefit doesn’t grow beyond your full retirement age, so make sure you do not wait beyond your FRA to claim it..
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at [email protected].
My husband died at age 59…I began collecting survivor benefits I am now 67, I am employed full time as a caregiver making $13, 800/gross annual. I have zero debt except for 2 monthly credit cards that I pay off each month. Should I wait until age 70 to collect my SS benefits or my husband’s ?
I would always defer to Rusty’s response to your question but since you are already receiving survivor benefits, the next question is when (or if) to take your own social security retirement benefit based on your own work record.
Assuming that 67 is your full retirement age, if you wait to start taking your own social security retirement benefit, your own social security retirement benefit will grow by about 8% per year until you hit age 70.
At age 70 these increases end so at age 70, if your own social security retirement benefit is greater than your survivor benefit, you would advise the Social Security Administration that you wanted to begin receiving your own social security retirement benefit instead of your survivor benefit.
One additional note: If your own social security retirement benefit is already greater than your survivor benefit and you want to stop working now, you can certainly elect to begin receiving your own social security retirement benefit instead of your survivor benefit at any time between now and age 70.
That choice is completely up to you but when you elect to switch from your survivor benefit to your own social security retirement benefit, your own social security retirement benefit will not get any additional 8% annual increases.
Dan W’s response is spot on. If your benefit from your own work record at age 70 would be more than the survivor benefit you are now receiving, waiting until age 70 to claim would be a great strategy. Your benefit at age 70 will be 32% more than it would have been at your full retirement age (66), and you’ll get that higher amount for the rest of your life. And until then, you can continue to collect your survivor benefit.