Social Security Claiming: The Case of the Widowed Late Boomer

This is the latest in a series of biweekly articles featuring Social Security claiming case studies drawn from the ALM publication “2024 Social Security & Medicare Facts,” by Michael Thomas with support from Jim Blair, a former Social Security administrator, and Marc Kiner, a planning expert with extensive experience in public accounting.

The Scenario: Widowed Late Boomer With a Sizable Survivor Benefit

Carl is a single taxpayer whose wife died after generating her own substantial earnings history, leaving him eligible for widower benefits.

Carl has the option to file for benefits as a widower and then switch to his own work record later — no later than age 70 — or file on his own work record before his full retirement age and take the survivor benefit at his full benefit age.

Carl’s full retirement age is 67, having been born in June of 1962. His personal work history gives him a full retirement age benefit of $2,244, while his survivor benefit is valued at $1,886. Finally, he has an actuarially projected death age of 85.

With this set of conditions, Carl has as many as five distinct claiming scenarios to consider, and the jump in projected lifetime benefit payments between the least and most optimal claiming strategies is about $225,000.

What the Numbers Say

According to the authors, the least optimal claiming approach would have been for Carl to file in January 2024 at age 61 for a reduced survivor benefit of $1,472. He would then file in July 2024 at age 62 for his own reduced worker benefit of $1,580, resulting in a total lifetime projected benefit amount of $473,352.

A better approach would be for Carl to file in July 2024 for his own reduced worker benefit ($1,580), but he would wait until June 2029 to file at age 67 for his full survivor benefit of $1,886. This would increase the projection to $536,430, an approximately $60,000 jump in benefits.

An even bigger projected benefit increase comes from assuming Carl waits until June 2029 to file at age 67 for his full survivor benefit ($1,886). Assuming he also waits until June 2032 to file at age 70 for his maximum worker benefit amount of $2,782, this would result in a significantly larger projected lifetime benefit of $621,514.

The second most optimal approach sees Carl file in January 2024 for his reduced survivor benefit ($1,472) and in June 2029 for his full worker benefit ($2,244). This results in another $2,000 in projected lifetime benefits, for a total of $623,020.

Finally, the optimal approach: Carl files in January 2024 for his reduced survivor benefit amount of $1,472, but he waits until June 2032 to file for his maximum worker benefit of $2,782. This blended strategy boosts the benefit by another $75,000, for a total projection of $702,290.

Key Considerations for Survivor Benefits

As the authors explain, after the death of a spouse, a surviving spouse can generally begin to claim Social Security survivor benefits as early as age 60 — although the benefit will be reduced based on the number of months remaining until the survivor reaches full retirement age.

As with a spousal benefit that is received when both spouses are alive, the amount of the survivor benefit is based on the deceased spouse’s retirement benefit, meaning that the benefit increases in proportion to how much the spouse earned during working years.

If the surviving spouse reached full retirement age before becoming widowed, the survivor’s benefit will equal 100% of the deceased spouse’s full-retirement-age benefit.

If the deceased spouse was receiving a reduced benefit, the survivor is only entitled to receive that reduced amount. That said, if the surviving spouse had reached full retirement age at the time of the claim, he or she will be entitled to the higher of the reduced benefit or 82.5% of the deceased spouse’s full benefit.

Also notable, if a surviving spouse is between ages 50 and 59.5 and is disabled, he or she is entitled to receive a reduced benefit equal to 71.5% of the deceased spouse’s benefit. However, additional complexities come into play when a surviving spouse is also entitled to claim his or her own retirement benefit. If both spouses are already claiming benefits, the higher benefit amount automatically will become the survivor’s benefit.

Finally, if the surviving spouse has not yet claimed his or her own benefit, he or she is entitled to receive the survivor’s benefit or his or her own benefit. For many surviving spouses who have yet to reach full retirement age, it can be beneficial to take the survivor benefit and allow his or her own benefit to grow. When the surviving spouse reaches age 70, he or she can switch from the survivor benefit to his or her own benefit, and receive an increased benefit.

Ultimately, in determining which benefit to choose and when, it is important that both the size of the benefits and the client’s life expectancy are taken into account. As in Carl’s case, a client who has a long remaining life expectancy may choose to take a lower survivor benefit for several years in order to eventually switch to an increased benefit at age 70.