Get What’s Yours

Last week I had an gentleman call me on behalf of his 74 year old mother in law,  her husband had died 12 years ago and he was wondering if she was receiving her maximum allowed Social Security benefits?  Unbeknownst to her, she was still collecting on her own record and never switched to survivorship when her husband passed away, since he had not yet claimed on his record.  The good news is we were able to switch to survivorship benefits and go back 6 months, the bad news is we can’t go back 12 years, thus she lost 11 ½ years of greater benefits!   You might think this is an isolated case, but according to a recent study conducted by SSA  (Sept 2019) of the 30 million current beneficiaries of Social Security benefits; 15,076 were eligible for an additional $193.8 million in survivorship benefits.  Further, if these individuals do not file for benefits, they estimate 12,615 of these beneficiaries could lose an additional $530.0 million over their lifetimes.

In most cases if one spouse dies who was collecting benefits dies, SSA will discuss claiming options with the surviving spouse, but they do not have a process in place to identify existing and previously entitled spouses who are eligible for survivorship benefits.  This is especially true where individuals who were married for at least 10 years and got divorced.  Now if they never remarried or remarried after turning 60 years old, they have the ability to claim survivorship benefits, but you have to reach out to SSA with proof of your marriage and a divorce decree in order to explore all your options.

Case Study

Jan 65 lost her husband Ken in 2009, her PIA is $1,600/mo. and her survivorship is $2,800.  Jan remarried in 2017 to John who was born in 1953.  Since Jan remarried after 60, she has the ability to receive 100% of Ken’s benefits, but not until she reaches FRA (66 & 2 months).  We had Jan claim on her own record at 65 and she is receiving $1,500/mo.  Since she is now married, John can claim spousal benefits based upon Jan’s record (Restricted Claiming Provision) of approximately $800/mo. since he was born prior to 1/2/1954.  When Jan reaches FRA, she will switch to survivorship benefits based upon Ken’s record of $2,800/mo., but John’s benefits will remain the same since he can only claim on Jan’s benefits, not her survivorship benefits.  At 70 John will switch to his own benefits of approximately $3,800, while Jan will continue receiving Ken’s benefits.  Should John predecease Jan she would then switch to John’s benefits since it is larger than Ken’s.  Of interest, if Jan had gone immediately to survivorship benefits, John would have been unable to claim spousal benefits under the Restricted Claiming Provision.   Now wasn’t that easy, it’s almost like playing 3 dimensional chess!  Since life is definitely not simple and the only certainty is uncertainty ones needs to know all the options in order to maximize one’s benefits and get what is rightfully yours!

Retirees lose $3.4 trillion by claiming Social Security too early On Retirement June 2019

The Retirement Solution Hiding in Plain Sight:  How much Retirees Would Gain by Improving Social Security Decision.  Study finds suboptimal timing costs $111,000 per household.  Less than 4% of retirees wait until age 70 before claiming maximum retirement benefits

Case Study II

This morning I participated in the Retirement Income Virtual Summit and the speaker mentioned that those turning 100 is the fastest growing age contingent in the country.  I most always run my analysis showing men living to 85 and women to 95.  I was intrigued to see the difference in checks and the cumulative difference in amounts received when I change life expectancy to age 100. (See below).

Note check differentials;

  • At 80 – 73 $5,200/mo.               $9,300              $49,000/yr.
  • At 90 – 83 $6,400/mo.               $11,400            $60,000/yr.
  • Cumulative difference between Early – Primary
    • At 90 – 83 $478,000
    • At 100 – 93 $1.3 million
  • Breakeven Year @ 82 – 75

**  Note since the only Certainty in life is Uncertainty – I’d probably recommend that spouse (Tina) claim benefits when she retires at 65 and have Chris postpone his benefits until 70.  I call this my Las Vegas Strategy in that I am hedging the bet in the event that one dies early, while still protecting either one or both spouses should they live into their mid 80’s or beyond.


Note to self – If your going to live into your late 80’s and beyond – Wait until 70 before claiming benefits!

As always, if I can be of any assistance, never hesitate reaching out!

Dave Zander, CFP®