Ask an Advisor: I’m a 61-year-old widow. Can I collect Social Security on my work record at 62 and then switch to my husband’s at his full retirement of 72?

I’m a 61-year-old widow. Can I collect Social Security on my work record at 62 and then switch to my husband’s at his full retirement of 72? – Wendy

For widows and widowers with their own work history, there are some quirks that are important to know when it comes to Social Security retirement benefits and survivor’s benefits. Most people expect both benefits to start at 62, but survivor’s benefits can actually begin as early as age 60.

For a survivor whose spouse earned more, the strategy of applying for survivor’s benefit only (in effect deferring their own retirement benefits) can lead to a better long-term income plan because of how delayed retirement credits impact retirement benefits.

For example, if survivor benefits are $1,100 per month and retirement benefits are $1,000 per month then applying for survivor’s benefits immediately brings in the most amount of money into the household.

Continuing this example, if this survivor delays his or her retirement benefits until 70 there will be a 24% increase compared to filing at age 67 (on top of any cost-of-living adjustments or COLAs). At age 70, the monthly retirement benefit can be elected, and the survivor would receive $1,240 per month.

This strategy only works in with survivor’s benefits because of the “deemed filing” rule that applies to Social Security retirement benefits when they are applied for while younger than full retirement age (“FRA”).

For most people, FRA is age 67. Those born before 1960 have a full retirement age that is less than age 67. When dealing with retirement benefits only, the Social Security program will deem the application to be for all available retirement benefits.

When a survivor applies for his or her own retirement benefit prior to full retirement age, the Social Security program does not deem the application to be for all benefits available. Using the same figures from the example above, a survivor applying for his or her retirement benefit would receive $1,000 per month in respect to their own work history and remain eligible for electing a survivor’s benefit at a later point.

This has the a similar impact to delayed retirement credits, but the survivor’s benefit will not increase past the primary insurance amount that the deceased would have received at FRA (other than the cost-of-living adjustments that apply to all Social Security beneficiaries).

Though the deemed filing rules do not apply to survivors, there is a retirement earnings test that will apply to all Social Security benefits elected prior to full retirement age. This “test” is a formula used by Social Security that reduces any benefits based on the beneficiary’s earned income.

Earned income is income like wages or salary, it is not investment income (dividends, capital gains, interest) nor does it apply to rental income or distributions from retirement plans. This earnings test will limit the monthly benefit paid to the beneficiary in months where he or she earns more than the retirement earnings test.

These benefits are not gone forever nor are they lost – these withheld dollars are paid as an additional benefit on top of the Social Security benefit after full retirement age is reached. The retirement earnings test has two limits, a lower limit during most years and an increased limit in the year that the Social Security beneficiary turns full retirement age.

Sources – Social Security Program Operations Manual System (POMS) – GN 00204.035 Deemed Filing | Social Security Program Operations Manual System (POMS) – GN 00204.020 Scope of the Application

Doug “Buddy” Amis, CFP, is President, CEO and Owner of Cardinal Retirement Planning. Based in Durham, North Carolina, Doug and his team at Cardinal Retirement Planning provide comprehensive investment advising and management, financial planning, and tax consulting.

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This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

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