Here’s a special message to all Social Security representatives reading this column: You’re right when you tell customers that as a general rule, they can’t file for reduced benefits on one record and later switch to full benefits on another record. But if you’re talking to a widow or widower, that rule doesn’t apply.
I’ve heard from four readers in the past couple of weeks—three widows and one widower—who were all told they must choose to take benefits on one record or another. And once they make that choice, they can’t change. And that’s absolutely wrong. Widows and widowers have the option of taking reduced benefits on one record and later switching to higher benefits on another record. And the number of readers telling me they’ve been misinformed about this issue (the four people whom I heard from this week is just the tip of the iceberg) tells me this isn’t a few isolated incidents involving a few uninformed Social Security Administration reps. Something must be missing in the SSA’s training sessions because I’ve heard from hundreds of widows and widowers over the years who have been misled on this topic.
Before I explain this “widow(er)s option,” let me clarify the statement I made at the beginning of this column. The one in which I said that as a general rule, people can’t file for reduced benefits on one record and later switch to full benefits on another record. Actually, a version of this happens quite a lot. So let me explain what I’m talking about with examples.
Let’s say that Wilma is 62 and her husband Fred is also 62. Wilma wants to take her smallish Social Security benefit now, but Fred wants to wait until he is 67 to file for his much-larger benefit. Wilma can take reduced retirement benefits now. And then when Fred turns 67 and files for his Social Security, Wilma can file for spousal benefits on his record. But the reduction she took in her own Social Security will carry over to her spousal benefits. In other words, she won’t get full spousal benefits. She'll get a reduced rate.
But now let me turn the example around a bit. Let’s once again say that Wilma is 62, but this time we'll say that Fred is 68 and already getting his own higher retirement benefit. In this case, Wilma can’t take reduced retirement benefits on her own record now and later switch to higher full spousal benefits on Fred’s record. By the same token, she can’t take reduced spousal benefits on Fred’s account now and later switch to full benefits on her own record.
So what’s the difference in the two examples. In the second one, Fred is already getting Social Security when Wilma wants to file for benefits. And there’s a rule that says when you file for one benefit, you must file for all other benefits you’re due at the same time. In the first example, when Wilma turned 62, Fred wasn’t yet getting benefits so at that time, there were no other benefits (i.e., spousal benefits) for Wilma to file for. That’s why, later on, when Fred files for his Social Security, Wilma can then file for extra spousal benefits on his record.
It’s that “you must file for all other benefits you’re due at the same time” rule that doesn’t apply to widows and widowers.
Let’s go back to Wilma, who’s turning 62. And this time, we'll say that Fred is dead. In other words, Wilma is a widow. If Wilma went to some Social Security offices and talked to the uninformed SSA reps whom I mentioned earlier, she would have been told something such as this: “Wilma, because of the rule that says you must file for any and all benefits you’re due, you must file for your own reduced retirement benefit now, and you must file for any extra reduced widow’s benefits you’re due at the same time.”
But to repeat: That “you must file for any and all benefits you’re due at the same time” rule doesn’t apply to widows and widowers.
Once again, let’s go back to Wilma. Let’s say that her own full-retirement-age benefit is $1,800 per month and that Fred’s full-retirement-age benefit is $3,000 per month. Wilma might want to consider filing for reduced retirement benefits at age 62. She'd get about 70 percent of $1,800 or $1,260 per month. Then once she reaches her full retirement age, she could switch to 100 percent widow’s benefits, or $3,000 per month. (There are no “delayed retirement credits” paid on a widow’s benefit, so there would be no advantage to waiting past her full retirement age to collect widow’s benefits.)
Now, let’s turn things around a bit and say that Wilma’s own benefit is close to Fred’s. For example, we can say that her full-retirement-age benefit is $2,800 per month and that Fred’s full-retirement-age benefit is $3,000 per month. In this case, Wilma might want to start out with reduced widow’s benefits. At 62, she'd get about 82 percent of Fred’s full-retirement-age benefit, or about $2,460 per month. Wilma could collect those benefits until she reaches her full retirement age, at which point she could switch to 100 percent of her full-retirement-age benefit, or $2,800 per month.
Or if she could live on her reduced widow’s benefit a little longer, she could wait until age 70 and get roughly a 30 percent “delayed retirement credit” added to her monthly benefits. That means she'd get $3,640 per month starting at age 70.
Of course, Wilma isn’t forced to employ this “widow’s option.” Go back to the example where her own FRA benefit was $1,800 and her widow’s FRA benefit was $3,000. She could choose to forgo this “widow’s option” stuff and simply file for widow’s benefits now. In other words, at age 62, she'd be due about 82 percent of $3,000, or $2,460 per month. And that would be her benefit for good, except for future cost-of-living increases.
