“When should I start my benefit?” This was one of the most common questions I received in my career. My answer has always been the same, “tell me when your going to die and I’ll tell you when to file” – with the exception of spousal entitlement.

It is common for high-end wage earners to postpone entitlement to receive a higher monthly benefit while drawing income from a separate source to increase their SSA entitlement. The longer you wait the higher your benefit will be as well as any widow(er) subsequently entitled on your earnings record.

The spouse of the wage earner deciding to postpone benefits may not have a strong work history, but just enough to be entitled to a small retirement benefit on their own earnings record. Once they elect to start the smaller benefit rate, any reduction in the entitlement is permanent. It is only potentially affected by continued work. If you know you will be eligible on your spouse’s higher earnings record once they file, you know your benefit rate will increase to up to half of their original rate reduced for age when entitled.

The extra variable in this case scenario is the probability of your spouse predeceasing you. If they do, the monthly widow(er) benefit rate payable to you will be computed based on your age at the time of entitlement as a widow(er) and the monthly benefit payable will be added to your preexisting monthly benefit payable increasing your monthly benefit rate up to the rate payable at the time of death/time of election. This amount is added to your benefit rate payable on your own retirement and will effectively alleviate the original reduction factor, making calculation of break-even more complex. You need to be very mindful of longevity/health versus cash in hand use for personal use/investment. Typically, in this case scenario, the break-even for recovery of the initial loss of the original reduction would break even well below 8 years which statistically is more advantageous for you.

Here’s an example of two spouses both born in 1961 sharing a full retirement age of 67:

Spouse One (lower wage earner) rate electing to start benefit at 62:

original rate of $300.00

monthly benefit reduced for age 62 $202.00

Spouse Two (higher benefit rate) electing to start benefit at 67:

original rate $2700.00

Spouse One original rate now payable $1350.00

For Spouse One $1050.00, the amount payable after their original rate payable on their own record is deducted, is added to the $202.00 for a continued benefit rate of $1252.00

Spouse Two then passes away at age 69 making you eligible for widow(er) benefits.

Spouse One has received $16,968 on their own retirement from age 62 through 69. $8232.00 was not paid due to the initial reduction. The benefit remained reduced during spousal entitlement. The widow(er) rate payable at is now $2700.00. It is added to the original $202.00. This benefit rate would be increased to $2700.00 regardless of initial reduction so the initial loss of $98.00 a month no longer exists. Your new

benefit rate is increased by $2498.00 a month recovering the initial loss within 7 years, after which the initial reduction loss is no longer an issue.

Widow(er) benefits are one of the most complex benefit computations and should you become eligible it is based on your individual circumstances. Assuming current work is not an issue, in this case I would recommend filing strategy of Spouse One taking the reduced rate at 62. Of course the constant variable is the ages of the spouses when one predeceases the other. Everyone’s individual entitlement to Social Security benefits is personal based on their own life circumstances, being mindful of the structure of potential future entitlements should be considered with current decision making. As always, reach out if you want more specific guidance.

Maryellen Eckert

SSA Specialist