Many men have told me that they plan to delay starting their own Social Security until age 70, not only to increase their own benefits by 25 percent, but also to enlarge the amount their spouse will be able to draw in spousal benefits.
I think this is sweet every time a husband tells me this, but it’s not quite true. By delaying his benefit, he will receive a higher monthly check. But while he is alive, the most his wife is eligible to draw is 50 percent of the amount he was eligible for at his full retirement age.
If your spouse chooses to draw early, it won’t hurt you. If he chooses to wait to draw later, it won’t help you. Again, the key point here is “while he is alive.” If your spouse predeceases you, you are then eligible for Survivor or Widow Benefits. This type of benefit is based on the amount he was drawing at his death. If he maxed out his benefits by working till age 70, and you didn’t start drawing any type of Social Security benefit prior to your full retirement age, you will benefit from your spouse having worked longer.
Typically, I advise against delaying Social Security till age 70. In the above scenario I would argue that the husband gave up a lot of money by delaying Social Security by four years. If his monthly payment was around $2,000 per month, he lost about $100,000 by waiting. “Yes,” he’ll say, “but my payment is $300 more each month.” Unfortunately, many people die before breaking even. The government knows this, that’s why they pay you more to delay taking it at your full retirement age.
Insurance – and this is a type of insurance – is a gamble. I don’t like to gamble. I never recommend delaying Social Security. I know that extra monthly amount is enticing, but statistically you’ll not live long enough to break even.
Take that $100,000 and invest it aggressively. You’ll be able to get a higher return than the government, and at death, the money is in your husband’s estate.
Another wrinkle in your retirement planning is when there is a large age difference between you and your spouse. In order to draw spousal Social Security off your spouse, he must be drawing his own benefits. If he chooses to wait, you must wait. If you were a stay-at-home mother without enough work credits to qualify for benefits based on your own work record, you’ll have to wait to draw as a spouse.
If you married a much younger man, again, you’ll have to wait until he draws, and the earliest age he can draw is age 62. (These rules are different for divorced couples).
Spousal Social Security benefits automatically turn into Widows benefits … except when they don’t. With the size of the Social Security Administration’s burden, mistakes do happen.
If your spouse dies, the death is reported to the SSA by the funeral home. You don’t have to do anything. You won’t be able to get both your spousal benefit and your widow benefit. If your benefit doesn’t increase, you will have to notify the SSA. A widow is eligible to get up to 100 percent of what her spouse was drawing at the time of his death. But in order to get the full 100 percent, she must wait until her full retirement age to draw benefits. A widow is able to draw as early as age 60 (widows on SSDI can draw at age 50), but the amount will be permanently reduced.
To see the increase in benefits by age, get my free Social Security and Medicare Sheet Cheat at TheMedicareFamily.com.
Sylvia Gordon is co-founder of The Medicare Family, headquartered in Noblesville, where she educates thousands on Medicare and Social Security in all 50 states. You can learn more at TheMedicareFamily.com.