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A reader from Illinois asks for advice on filing Social Security survivor benefits when the deceased spouse passed away before Full Retirement Age (FRA) and before claiming retirement benefits.
“Would you please explain the rules regarding Social Security survivor benefits if the deceased spouse had not reached full retirement age (died at age 64; full retirement age 67) and had not filed for retirement benefits before death? The surviving spouse has not reached 60. Does she need to wait until 60 to be able to claim any spousal benefit? Past 60, would the amount grow with her age? At what point would it be 100% of the eligible amount? The spouse has a similar benefit amount. She wants to collect the spousal benefit while letting her own grow until age 70. When should she start collecting the spousal benefit?”
You’ve asked a series of questions. Let’s take them one at a time.
You first asked, "What are the rules on a survivor benefit if the deceased spouse hasn't made it to their Full Retirement Age (FRA) yet?" When talking about survivor benefits and how much the surviving spouse would get, I generally say they would get whatever the deceased spouse was collecting – or what they would have been collecting had they claimed the day before they passed away.
Your question has an important nuance. You indicated that the deceased spouse died before their FRA and that they hadn't turned on their retirement benefits yet.
Most people know that your benefit is reduced if you claim your Social Security benefit before FRA. However, if you pass away before your FRA and haven't claimed, the survivor benefit is not reduced. You don't damage the potential full survivor benefit for the surviving spouse. That's the exception to my general statement about the amount available through survivor benefits, which applies to people who have reached their FRA or beyond.
Survivor benefits are available to people who have been married for at least nine months and have reached age 60. The door to those benefits opens when you turn 60 unless you're disabled, in which case you can claim a survivor benefit as young as 50. However, if you claim the benefit at 60, you will reduce your potential survivor benefit to about 71.5% of what you otherwise could collect.
It's essential to be aware that two factors determine the survivor benefit. The first is if the deceased spouse had already claimed, especially if they claimed early, which would reduce the available benefit. The second is 'when' the surviving spouse claims. If the surviving spouse has not yet reached their own FRA, they could cause a further reduction in the benefit by claiming early – as young as age 60, as mentioned above.
Next, you asked, "At what point do you get 100% of the eligible amount?" You'll get 100% of what you could receive from the deceased spouse's record when you have reached your FRA, which, if born after 1962, would be at age 67. In your case, you mentioned you are about to turn 60, so your FRA for survivor benefits should be 67.
You referred to "spousal benefits." We must be careful with our words because there's a difference between spousal and survivor benefits. A spousal benefit is collecting when your spouse is still alive. A survivor benefit is after they've passed away. So here we're talking specifically about survivor benefits.
You mentioned the strategy of a surviving spouse claiming the survivor benefit but holding off on claiming their own retirement benefit. I don't know your numbers, so I can't say what you should do. However, if both spouses' benefits are about the same, a common strategy would be for the surviving spouse to claim that survivor benefit as early as possible.
You might say, "But that's going to reduce it!" Yes, but it will only be reduced until age 70, when the surviving spouse flips to their now fully maximized retirement benefit that received all the available delayed retirement credits. That two-step technique will generally maximize the potential dollars collected over a lifetime, even if the survivor benefit is reduced to its smallest by claiming it at age 60. The reduced amount would be collected for ten years, from 60 to 70, and then replaced by the surviving spouse's benefit, which has grown to its maximum value in the background because it was left unclaimed. It's just a 10-year penalty, not a lifetime penalty.
There's a special rule I'd like to mention. It's called the "widow's limit" in layman's terms. We said that if your spouse claims their benefit before they pass away, that can reduce your potential survivor benefit. The rule's formal name is the RIBLIM or Retirement Insurance Benefit Limit, and it's meant to protect surviving spouses when their deceased spouses decide to claim early, like at age 62. For example, if your spouse's FRA is 67 and they claim at 62, they are reducing their benefit to 70% of their PIA (Primary Insurance Amount) for the rest of their life. (The PIA is the amount available to workers if they wait until their FRA to claim.) If they die, the survivor benefit available to their surviving spouse is also reduced by 30%.
Social Security has a special rule that says, "Well, that seems a little harsh. The surviving spouse is penalized by the deceased spouse's choice, so we will limit the reduction if the deceased spouse claimed early." The limit defined by RIBLIM is that the surviving spouse's potential benefit is no lower than 82.5% of the deceased spouse's PIA, instead of the 70% that would result without the protection if the deceased spouse had claimed at 62, as in my example.
Let's take this one step further. The surviving spouse whose deceased spouse had claimed early would be eligible for 82.5%, but only if they wait until their FRA to claim the survivor benefit. If they claim early – and they can claim as young as 60 – they're only going to get 71.5% of that 82.5%, or about 59% of the deceased spouse's PIA. Granted, 59% is much better than 50%.
In short, in the worst case -- where your spouse may have lowered their benefit by 30% by claiming at age 62 and where you lower the benefit even more by claiming at 60 – the REBLIM protection gives you access to 59% of your deceased spouse's PIA instead of 50%. In the best case, you could receive the full 82.5% if you wait until your FRA (age 67, in my example) to claim it.
People are often confused by having two distinct factors influencing the benefit amount. You have a potential reduction that the deceased spouse could have caused by claiming early – and then another potential reduction based on the age of the surviving spouse who is filing for benefits.
In your hypothetical, if you didn't have your own retirement benefit to switch to at 70, you may have wanted to wait until age 67 before claiming the surviving spouse benefit even if your deceased spouse passed before you turned 67. Your goal would be to wait to get the most survivor benefit you could for the rest of your life. You would have to do that analysis and look at your situation to decide. Just because your spouse passes, it doesn't mean that the best strategy is to claim the surviving benefit immediately. Just be aware of the potential reductions if you're below your FRA.
But if you know that you will switch to your own retirement benefit at 70, it is very common to trigger your survivor benefit as soon as possible. You're not looking at a lifetime penalty for having claimed early. The shorter penalty timeline means claiming promptly makes sense in most cases.
Here's a word to all readers: don't feel you must become a Social Security expert and memorize all these rules. It's enough to remember that if your spouse passes away, you should talk to someone before rushing down to Social Security to claim.
Don't feel you must memorize all these rules and be a Social Security expert. Just remember enough about this that you say, "Gee, if something happens and my spouse passes away, I should talk to someone before rushing down to Social Security to claim." Make sure you've got your ducks in a row and know the best claiming strategy for yourself before you go to Social Security.
Understand this: when you go to Social Security, they won't help you determine what's best for you. They'll talk to you about choices but won't guide you by laying out the pros and cons of different options. In the case of a standard claim where nobody's passed away and you've decided when you'll claim (whether at 62, 67, 70 or something in between), not much consultation is called for. However, if there's a deceased spouse, minor children or any other exception, check with someone who understands Social Security before you claim. There can be potential strategies and pitfalls.
Much research has been done on how Social Security has effectively failed many surviving spouses, who left a lot of money on the table because Social Security didn't bother to tell them that they could claim differently and have more money. I consider it a travesty. My rule is: protect yourself. If you have any questions about a claiming strategy, figure them out before going to Social Security.