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Retirement Planning > Social Security > Claiming Strategies

Social Security Claiming: A Tale of Two Survivor Benefits

By John Manganaro

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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: Two Divorces and Two Deceased Ex-Spouses

Amanda is a single taxpayer who was married to both of her ex-husbands for more than 10 years, and both ex-spouses have passed away. This means Amanda is now eligible for survivor benefits from either divorced spouse’s record, or she can draw her own retirement benefits.

Having been born in November 1964, Amanda’s full retirement age is 67, at which time her own full retirement benefit would be $1,548. Her actuarially projected longevity is a little over 87.

Amanda’s first deceased ex-spouse also has a full retirement age, or FRA, of 67, at which time he would have been eligible for $2,186 in monthly payments. The second deceased ex-spouse likewise has an FRA of 67, with a larger benefit of $2,457.

In this scenario, Amanda can take a variety of claiming approaches. To start, she can file for either ex-spouse’s benefit at age 60, or she can claim her own worker benefit at age 62 and 1 month. Also among her options is claiming one survivor benefit in the beginning (i.e., before full retirement age) and then switch to a higher benefit at a later age.

Notably, even though Amanda is eligible on her own work record, in practice she will end up taking only surviving divorced spousal benefits, as both are higher than her own. That is, her own benefit increased for full delayed retirement credits at age 70 is not higher than either of the divorced spousal benefits available to her.

So, in the end, Amanda has three primary claiming scenarios to consider, and the difference between the most and least optimal strategies is about $130,000 in additional projected benefits.

What the Numbers Show

The least effective strategy would see Amanda wait to file in November 2031 for 100% of her surviving divorced spouse benefit from her second husband, giving her a monthly payment of $2,457. This results in a total lifetime benefit projection of $604,422.

A better strategy would be for Amanda to file at age 60 in November 2024 for a reduced survivor benefit from her second deceased ex-spouse, which would give her a monthly payment of $1,756. She would then file in November 2031 for her full surviving divorced spousal benefit from her first spouse, which increases her monthly payment to $2,186.

This second approach delivers a projected $685,260 in total projected benefits.

Finally, the best strategy would be for Amanda to flip the script and file at age 60 in November 2024 for a reduced surviving ex-spousal benefit on her first spouse’s earnings record, giving her a monthly payment of $1,562.

Then, in November 2031, Amanda files at age 67 for her full surviving divorced spouse benefit on her second spouse’s earnings record, boosting her monthly payment to $2,457. This results in a total projected benefit of $735,630.

Bonus Insight on Survivor Benefits

Among the many sources of insight on the rules and requirements affecting survivor benefits is the ALM Tax Facts library.

As detailed in entry No. 3632, after the death of a spouse, the surviving spouse can 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 traditional spousal benefit that is received when both spouses are alive, the amount of the survivor benefit is calculated based on the deceased spouse’s traditional 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 his or her death, the survivor’s benefit will equal 100% of the deceased spouse’s benefit. If the deceased spouse was receiving a reduced benefit, however, the survivor is only entitled to receive that reduced amount.

Importantly, 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. If a surviving spouse is between ages 50 and 59.5 and is disabled, he or she is entitled to receive a reduced benefit of 71.5% of the deceased spouse’s benefit.

Beyond these basic rules, additional complexities come into play when a surviving spouse is also entitled to claim his or her own retirement benefit. Also, should both spouses already be claiming benefits upon the death of one member of the couple, the higher benefit amount automatically will become the survivor’s benefit.

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. Thus, 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.

Credit: Chris Nichols/ALM

John Manganaro

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