Protecting the Surviving Spouse
Last week I spoke to the San Antonio Fire & Police Association regarding the elimination of the WEP and GPO provisions. For many firefighters and police officers, this is a major change because they may now qualify for either their own Social Security benefit or a spousal benefit — whichever is greater.
But as I walked through the planning process, something became very clear.
This is not just about maximizing benefits.
It’s about protecting the surviving spouse.
The Pension Decision That Can’t Be Undone
Many firefighters and police officers have excellent pension benefits. In San Antonio, it’s not uncommon to see pensions around $6,000 per month for life. However, when retirement begins, they must choose survivorship options:
- Single Life
- Joint Life 100%
- Joint Life 66 2/3%
- Joint Life 50%
That decision permanently determines what the surviving spouse will receive after death.
Now add Social Security into the equation and things become even more important.
Why Public Employees Often Have Modest Social Security
Many public employees did not work under Social Security for 35 years because they spent most of their careers in city pension systems that did not pay FICA taxes. As a result, their personal Social Security benefits are often modest.
Here’s where many couples unintentionally make a costly mistake.
The “File Early” Trap
Since a spouse cannot receive a spousal benefit until the other spouse files, many firefighters and police officers want their husband or wife to claim Social Security early.
On the surface, that sounds logical.
But the spouse may give up a much larger personal retirement benefit by filing early. Then, if the firefighter or police officer dies first, the surviving spouse could face a double hit:
- A reduced pension benefit
- A permanently reduced Social Security check
That combination can create a significant drop in household income.
A Real Example: Ed and Christina
Case Study: Ed and Christina
Ed will soon begin receiving a pension of approximately $4,000 per month, but Christina would receive only 50% upon his death.
If Ed claims Social Security early and dies first, Christina could face a sharply reduced pension and a lower Social Security benefit for the rest of her life.
In Ed’s case, waiting until age 70 may make far more sense because it substantially increases the survivor benefit available to Christina if he predeceases her.
This Isn’t About Break-Even Math
Social Security planning is not simply a “break-even” exercise.
It is survivor income planning.
The pension election, the Social Security claiming strategy, family health history, longevity, and other assets all work together. Every option needs to be discussed before making an irreversible decision.
Sometimes the best retirement decision is not the one that creates the most income today.
It’s the one that best protects the person you may one day leave behind.
David P. Zander
CFP Emeritus Board ™
dzander@back9pro.com
260-615-0078
