For Young Widows, the Best Social Security Claiming Choice Isn't Always What It Seems

This client got benefit estimates from the Social Security Administration, but they don't tell the whole story.

Deciding when a young widow should start receiving surviving spouse benefits requires detailed information about both spouses. A financial advisor recently emailed me about a new client, hoping for a quick, clear answer to his related question:

“Should a widow start taking her husband’s benefit, starting immediately, for the rest of her life?”

That’s  a loaded question. Let’s see how to get to an answer without a lot of detail.

What Social Security Provides

When people call Social Security for benefit information, they get that day’s information. In this case, the surviving wife called in April and received the following estimates:

You can see from these amounts why an advisor might think it’s a good decision to claim her surviving spouse benefit now. But there are lots of missing dots.

More Information Is Critical

The advisor needs at least the following information before making a recommendation:

The advisor also needs details about her deceased husband such as his birthday, Oct. 4, 1962, and when he died, 2015.

He was only 53 when he died. Without his Social Security statement and full earnings record, the advisor doesn’t know how many credits he earned. But since she was given a surviving spouse benefit estimate, it’s safe to assume he was fully insured.

Those bits of information are important because the advisor needs to back into each primary insurance amount before helping her decide when to claim.

Backing Into PIA

Start with her own worker benefit. At age 63, her benefit is about $1,200. If she claimed that benefit today, she’s claiming 48 months before her full retirement age and locking in a 25% reduction. Therefore, her estimated primary insurance amount is about $1,600. And her maximum age 70 benefit would be just under $2,000.

Then look at claiming survivor benefits. If she claims now — 3 years and 10 months early — her benefit would be reduced 16%. Backing into his PIA, we therefore get about $3,450. That’s also her maximum survivor benefit.

To determine her best benefit combination, compare her own maximum benefit at age 70 vs. her maximum widow benefit at her survivor FRA.

The General Rule

Filling in some details still doesn’t provide enough information to answer the advisor’s question. 

In this kind of situation, start with the general rule: It’s ultimately best for widows to claim their maximum benefit between their two options. We now know in this case that her highest benefit would be her surviving spouse benefit — but only when she claims at her survivor FRA. 

Since a young widow is eligible to switch benefits, she can claim her own reduced worker benefit ($1,200/month) then switch to her full survivor benefit ($3,450) at her survivor FRA.

Connecting Dots Between Two Benefits

Even now, the advisor does not have all the necessary dots to connect, so this is only a preliminary plan. Additional critical pieces of information include: 

Unless she needs to start her best benefit early, it is not a recommended strategy. Starting her largest benefit now will deliver a substantially smaller benefit throughout her oldest years. Annual cost-of-living adjustments are based on her starting benefit amount, which will be significantly smaller.

By waiting to claim her highest benefit at her survivor FRA, she can still start her own benefits now, then maximize her bigger survivor benefit. That would result in an increase of more than $550 a month. It’s worth waiting if possible.

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