4 Essential Widows’ Social Security Claim Strategies

When deciding how to maximize a widow’s surviving lifetime benefits, financial advisors should follow Reichenstein’s four claiming techniques. The age of the partner is reflected in each scenario. The sums are also without the cost of living adjustments.

1. Widows who are 70 or older: Reichenstein advised the surviving spouse to contrast her pension payments with her death benefits and choose the greater of the two amounts in this case. Her lifetime greatest value will be that amount, and she should start receiving it immediately.

2. Widows between the age of 70 and the full retirement age for death benefits: In this case, Reichenstein initially considers that the widow has not yet started receiving retirement benefits. The surviving spouse should start receiving survivor benefits when the high earner passes away and move to her benefits at age 70, if it is higher.

For instance, if a woman is 66 years old when her husband passes away, she will also have a primary insurance amount (PIA) of $1,800, an FRA for pension payments of 66 years & four months, and an FRA survivor benefit of 66 years. Her spouse started receiving $2,000 per month in benefits at or after his FRA. To reflect 44 weeks of postponed retirement credit, which is $1,800 multiplied by 1.2933 to equal $2,328, Reichenstein advised her to start receiving survivor benefits first and switch to her payments at age 70. Benefits are increased by 8% per year, or two-thirds of 1% per month, for postponed retirement credits beyond FRA.

However, Reichenstein pointed out that since the survivor benefits are greater than her pension payments at age 70, she should start receiving them immediately and continue to do so for the rest of her life if they were $2,400 per month.

1. The alternative is to start receiving her maximum spousal benefits today ($1,600) and then move to retirement benefits at age 70 ($2,100 x 1.2933), which reflects 44 months of postponed retirement credits, for a total of $2,716 per month. According to Reichenstein, this choice would offer greater cumulative benefits if she lived a long life. Reichenstein noted that if she lives to 90, the latter claiming technique will result in $137,376 more in cumulative lifetime payments. “When you break that down, it makes a significant difference; those are actual benefits.”

2. Widows with higher PIA spouses who pass away while they are younger than their FRA for death benefits: Throughout this example, Reichenstein used the assumption that the widow is 62 years old with a PIA of $1,800 and an FRA of 67 for all benefits when her husband passes away. Her maximum surviving payments were $2,000 per month from the beginning of his payments at and after his FRA. She starts receiving survivor payments, which are reduced by 20.4 percent to $1,592 because she began to receive them five years after her FRA for death benefits. She may then transition to her pension payments at age 70, which, based on her three years of deferred credits, would be 24 percent more or $2,232.

3. Another illustration is that her PIA is assumed to be $800. Because her FRA is 67 in this instance, the highest her retirement benefit can increase is by 24 percent, or $992. However, her survivor benefit cap is $2,000 instead. Reichenstein advised her to remain with that and move to widow benefits at age 67, even though her pension payments would only amount to $560, or 70% of her PIA because she applied for these payments at age 62. If she lives until the net profit age of 79 and 8 months, Reichenstein said this technique delivers the bigger accumulated real lifetime benefits, even if she might lose money for a few years. He added that the incorrect claim technique could pay the widow a great deal of money, saying that in most cases, it pays to wait and receive the maximum survivor payments.

4. Widows younger than the FRA for death benefits and whose lower PIA spouse passes away: In this scenario, the widow is 62 years old, has a PIA of $2,000, and her husband passes away at his FRA. His PIA was $1,500, but his retirement benefits were not started. One choice, according to Reichenstein, is for her to begin receiving pension payments of $1,400 per month at age 62 [$2,000 multiplied by 0.70] and then switch to survivor payments of $1,500 at age 67. The alternative is to start receiving $1,194 in survivor benefits today, which are reduced for filing a claim earlier. She should then begin receiving her $2,480 retirement benefits at age 70, three years’ worth of retroactive credits. If she survives to at least 72, Reichenstein remarked that this technique would offer greater lifetime advantages. At age 90, her actual lifetime benefits would be $211,824.

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