Widows Benefits And Retirement Planning

It turns out that there is a nearly-endless supply of complications when it comes to retirement planning and Social Security.  In a recent article, the New York Times highlighted the plight of some widows trying to maximize their Social Security benefits.  Widows can claim either benefits based on their own earnings or those of their deceased spouses. The thing to remember is that this is an either/or proposition.  When the spouse dies, the widow can elect the higher benefit. The widow’s benefits are only a percentage of what Social Security was paying the now-deceased spouse each month. This means that the higher amount the widow is entitled to could be less than what his or her spouse was getting each month. For this reason, the consensus seems to be that the higher-earning spouse should maximize his or her Social Security benefits. This will mean more money for the widow for the rest of his or her life. For this reason, the higher earning spouse should wait as long as possible to begin to collect benefits. That means waiting until age 70. The lower-earning spouse can begin to collect benefits at 62. This will bring some earnings into the family, but not jeopardize the long-term financial prospects for the lower-earning spouse. Alternatively, a widow below age 70 could collect widow’s benefits while letting his or her own benefits increase until he or she turns 70. At that point, his or her own benefits could be more than the widow’s benefits. I suspect that every husband and wife would profess a willingness to take all necessary steps to financial protect his or her spouse.  Put that way, the decision is a no-brainer Despite this, far too many people are starting their Social Security retirement benefits too early. If a couple is lucky, the higher-earning spouse will be the second to die. But, demography suggests that this, at present, is unlikely. For now, having the higher-earning spouse wait until 70 to collect his or her benefits is one very simple thing he or she can do to protect his or her spouse after death. 

New York Times Article On Widow’s Retirement Benefits.