When you have access to a Social Security Survivor Benefit and a Social Security retirement benefit, you can maximize your lifetime benefits by coordinating the two and planning out your strategy for taking each benefit.
As we’ve covered in other articles, it often is best to delay receiving your own benefit as long as possible. This is because you will receive Delayed Retirement Credits (DRCs) for every month after you’ve reached your Full Retirement Age (FRA, which is age 66 if you were born between 1943 and 1954, and increasing gradually up to age 67 if you were born in 1955 or later). This DRC amounts to 8% per year, or 2/3% per month.
In addition, it can be beneficial to delay receiving a Survivor benefit past the earliest age it is available (age 60, or age 50 if permanently disabled) as this benefit can be reduced to as little as 71.5% of it’s potential amount if started early.
Plus – this is the really important point to note - neither benefit has an impact on the other. I’ll illustrate this below in a couple of examples.
Survivor Benefit is Less Than Own Benefit
John, age 60, just lost his wife Priscilla at her age 66. Priscilla had just started receiving her Social Security benefit in the amount of $1,000 per month. John has a PIA of $2,000 per month available to him – meaning he will receive $2,000 at his FRA, age 66. He could also begin receiving his own benefit at age 62, in the amount of $1,500 due to the early start reduction.
Since John is age 60, he is also eligible to receive a Survivor Benefit based upon Priscilla’s record. John could receive $715 per month in Survivor benefits beginning right now, and continue to receive this amount until he decides to draw benefits based on his own record. So this means John could receive this amount for 6 years, and then file for his own benefit at the $2,000 per month level. He could also receive the Survivor Benefit for up to 10 years, and then file for his own benefit at the DRC-enhanced amount of $2,640.
It’s important to note that John isn’t required to begin receiving the Survivor Benefit at age 60, he could delay to age 62 (for example) and then the benefit would be approximately $810 per month. If he waits until he is age 66, the Survivor Benefit would be $1,000.
Survivor Benefit is Greater Than Own Benefit
Lucy, age 58, just lost her husband David, who was 65. David had not begun to receive his Social Security benefits as of his date of death. Had he lived to age 66 (his FRA) he would have been eligible for a benefit of $1,800 per month. Lucy is due to receive a benefit of $1,500 per month at her age 66.
When Lucy reaches age 60 she has a choice: if she files for the Survivor Benefit, it will be reduced to $1,287 per month. She could receive this amount until she decides to file for her own benefit ($1,500) at a later date. On the other hand, if she waits until she is age 62, she could receive her own benefit in the amount of approximately $1,113, due to the reduction factors. She could receive that amount until she reaches age 66, at which point she could begin receiving the Survivor Benefit at the maximum rate, or $1,800.
Going back to the first hand, Lucy could file for the Survivor Benefit right away at age 60, receiving $1,287 per month, and then wait to age 70 to file for her own benefit. This would give her the maximum benefit based on her own record, of $1,960, greater than the maximized benefit from David’s record. If she has the resources, she could wait until age 66 and file for the Survivor Benefit at the $1,800 rate and then at age 70 file for her own benefit at $1,960.
Because taking one type of benefit or the other has no impact on the other benefit, she can choose which strategy works best for her own situation.
Hope this helps to clear up some of the confusion around these benefits.