Last month we discussed general principles around seniors taking social security benefits and why one should strive for putting off claiming as long as possible to maximize permanent benefits for both oneself and/or their married partner. This month we examine tactics for those that are single in their retirement years by death or divorce.
Widowed retirees are eligible for survivor benefits which equate to the full amount their loved one was receiving monthly at their death. For many widows, especially, this will be a “raise” from either their own “earned” benefit (the benefit resulting from their own record of quarters worked and income earned during that time) or their spousal benefit (one-half the amount of their mate). The only stipulation is that the marriage must have lasted at least 9 months unless the death was ruled an accident at which they can begin receipt of benefits immediately. The marriage must be deemed lawful in the state of residence so common-law marriages are recognized as applicable. A widow/widower can start receiving their check as early as age 60 and, if disabled, at age 50, but the benefit will be reduced. If the remaining spouse remarries after age 60, they can receive their deceased spouse’s benefit, but if they remarry before the age of 60, their benefit check will cease either until they hit 60 or the remarriage ends.
It pays for widows and widowers to crunch the numbers and be very intentional in doing their social security claiming. Retirees who wait to age 70 to take their payments after reaching their full retirement age of either 66 or 67 receive an 8% compounded increase in their benefit amount for every year they delay. A guaranteed 8% increase hands-down beats any other investment vehicle. It’s important when doing retirement planning to know the dollar amount your age 70 benefit will be for comparison sake. You also need to know your full survivor benefit. Weigh the two amounts and take the higher benefit last. If you are the widow/widower and your enhanced earned benefit at age 70 is higher than your spouse’s survivor benefit, you can take the survivor benefit as early as age 60 and then switch gears and take your own enhanced (with those 8% compounded increases) benefit at 70 to maximize the dollars you will receive over your lifetime.
Now let’s talk about divorce. As long as a marriage lasted 10 years (as per the date the divorce decree was signed), an individual can claim a spousal benefit from an ex-spouse. The claimant must be unmarried and at least 62 years of age. Another stipulation is that the ex-spouse must have filed for their own benefit unless the divorce occurred over 2 years ago. If a divorcee is over 62 and remarries, they must report the marriage to the Social Security Administration and the checks will cease. The only exception would be if the remarried spouse determines that the ex-spouse has died. Then, the remarried spouse needs to compare his/her current benefit to the survivor benefit of the deceased spouse. If the resulting survivor benefit is higher, they are entitled to that benefit. Please know that it is up to divorced people to keep track of their ex-spouses and whether they are alive or deceased. The Social Security Administration will not help you with strategies concerning ex-spouses and will not even verify the death of an ex-spouse.
Do you have more questions about social security or retirement planning in general? I’d love to help! Please email me at [email protected] or call me at 563-949-4705.
Securities offered through J.W. Cole Financial, Inc. (JWC) Member FINRA/SIPC. Advisory services offered through J.W. Cole Advisors, Inc. (JWCA). Huiskamp Collins Investments, LLC and JWC/JWCA are unaffiliated entities.