Social Security Strategies: Widow's Benefit

Last Updated Aug 30, 2011 4:16 PM EDT

Q: I'm a 57-year-old widow and can collect widow's benefits at 60. Can I collect on my late husband's benefits at 62 and collect my full benefits at 67 or 70? Will it affect my benefit amount by doing so? Will I still be able to work?
A: The following is a response from my Right Financial Plan co-author Tiya Lim, who wrote the Social Security section of our book.

If you're eligible for a widow's benefit and your own worker benefit, there are a number of filing possibilities depending on what your benefit amounts are. Generally, whichever benefit is higher, you'll want to delay that benefit as long as possible.

For example, if your full widow benefit is $1,000 per month, and your own worker benefit is $1,200, it makes sense to delay your own benefit as long as possible. You can take the widow benefit early at age 60, which results in a 70 30 percent reduction, providing you with about $700 per month. But, when you reach full retirement age, you can collect $1,200 per month or even wait until 70 to collect $1,584 per month on your own work record.

If instead your widow benefit is greater ($1,000) than your own worker benefit ($500), you may want to take your own worker benefit at the earliest age possible (62) and receive a reduced worker benefit ($375 per month, as a 25 percent reduction applies to filing early). Once you reach full retirement age, you can switch to your widow's benefit ($1,000). Unlike your own worker benefit, the widow's benefit doesn't increase past full retirement age.

That's important to remember, since it may still make sense to delay your own benefit, even when it's less than the full widow benefit. Say the full widow benefit is $1,000 per month and your full worker benefit is only $800. If you delay your own benefit to age 70, it would grow to $1,056 per month, higher than the most you would receive as a widow.

A few additional considerations:

  • If you collect benefits prior to reaching full retirement age and continue to work, an earnings test will apply. If your income is above $14,160 (for 2011), then $1 of benefits is taken away for every $2 you earn over the limit. Once you reach full retirement age, your full benefits get re-instated and you earn those "lost" benefits back
  • Full retirement age for a worker isn't always the same for a widow. For example, if you were born in 1956, your full retirement age for a worker is 66 and 4 months, while your full retirement age as a widow is 66. If you are currently 57 and born in 1954, 66 is the full retirement age for both benefits.
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For further reading on Social Security, see the following posts: Three ways I can help you become a wiser investor:
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    Larry Swedroe is director of research for The BAM Alliance. He has authored or co-authored 13 books, including his most recent, Think, Act, and Invest Like Warren Buffett. His opinions and comments expressed on this site are his own and may not accurately reflect those of the firm.