Why you Shouldn't Claim at 62 #5: The Survivor Benefit

Before claiming your Social Security Benefits at age 62, you need to know about the Survivor Benefit. Every married couple should know how the Survivor Benefit works and how to maximize the size of it. Social Security’s Survivor Benefit will play a critically important role in the life of a married woman. It can help her to maintain a good quality of life after her Husband dies. But the size of the Survivor Benefit she receives is determined by her Husband, and when he decides to claim. 

Delay the Bigger Benefit

To maximize the Survivor Benefit, the spouse with the bigger benefit should delay claiming as long as possible, ideally until 70. Despite the fact that many women are in the workforce, 75% of the time the Husband has the bigger Social Security benefit. Statistically, that’s just the way it is. With a married couple, the spouse that has the bigger benefit, is the more important benefit. At the very least, the spouse with the bigger benefit should delay claiming it as long as possible.  They should delay claiming that benefit as long as possible in order to make that benefit as big as possible. They should make that benefit as big as possible for two reasons:

1. Both the Husband and Wife can enjoy that bigger benefit while they are both alive.
2. That benefit will eventually become the Survivor Benefit. It is potentially the only benefit the surviving spouse will receive after the first spouse dies.

This is an important consideration. After the first spouse passes away, the surviving spouse is only going to receive the bigger of the two benefits for the rest of their lives, the smaller benefit will stop. The bigger benefit is called the Survivor Benefit. If the spouse with the bigger benefit delays claiming it as long as possible, they will also maximize the size of the Survivor Benefit. 

Woman Typically Outlive Men

Social Security’s Survivor Benefit usually plays a critically important role in the life of a married woman. Women overwhelmingly outlive men, it isn’t even close. If you look at the number of men and women alive at age 85, there are twice as many women than there are men. There are three times as many women alive in their 90s than there are men. The probability is very high that Husbands will predecease their Wives or the Wife will outlive her Husband. After that happens, the surviving Wife will only receive the bigger of the two benefit checks in the form of the Survivor Benefit. She will only receive that one Survivor Benefit check every month for the rest of her life.   

Social Security sends out approximately 4 million Survivor Benefit checks every month. About 95%, or 3,800,000, of those 4 million Survivor Benefit checks are sent to women. You are reading that correctly. Ninety-five percent of the Survivor Benefit checks Social Security sends out every month are sent to women. That backs up my claim that women overwhelmingly outlive men.

If the Husband has the bigger benefit, and he ends up claiming it at age 62, when he dies, he will leave his surviving Wife with the smallest Survivor Benefit possible. That increases the chances that she will struggle financially after he dies. Let’s say the Husband delays claiming his benefit past age 62. His own benefit will be increased, and so will the Survivor Benefit. If he claims his own bigger benefit at age 70, when he dies, he will leave his Wife with the biggest Survivor Benefit possible, greatly reducing the chances that she will struggle financially after he dies.

An Example

This chart shows how the Survivor Benefit works. For this example, the Wife had a Full Retirement Age benefit of $1,900 per month. The Husband had a Full Retirement Age benefit of $2,500 per month. I also assumed that they were the same age, and both had a Full Retirement Age of 66.

The column on the far left is the Husband’s Claiming Age column. Let’s look at what happens to the Survivor Benefit if the Husband claims at either age 62, 66, and 70. Regardless of when the Husband claims his benefit, the Wife claims her benefit at age 62. She claims her benefit at age 62 because they are going to receive her smaller benefit for the shortest period.

When One Spouse Passes On...

Whenever the first spouse dies, the surviving spouse is only going to receive the bigger of the two benefits. The smaller benefit will stop. If they delay claiming the Wife’s benefit, they will further shorten the period of time they will receive that smaller benefit. So claim it early, even as early as age 62. That is why, in the third column from the left, the Wife’s monthly benefit is exactly the same at $2,573. No matter the age the Husband claimed his benefit, the Wife claimed hers at age 62. Twenty years later, with annual COLA increases, the Wife’s monthly benefit grew to $2,573.

Now, if we just look at the top line of the chart, the age 62 line. That top line assumes that both the Husband and Wife claimed their benefits at age 62. If they both did that, 20 years later the Husband’s monthly benefit, with COLA increases, grew to $3,386 and the Wife’s grew to $2,573. The next column over, the Husband & Wife’s Total Combined Income, adds those two benefits together. Their combined monthly Social Security income at age 82 is $5,959. That is a large amount of monthly income. If we were to annualize that amount, multiply it by 12, their annual Social Security income at age 82 would be $71,508 ($5,959 x 12 months). That is a substantial amount of annual income. 

But if you look at the second to last column on the far right, the Monthly Survivor Benefit (Husband dies at age 82) (One Check) column, we assume that the Husband dies at age 82. Now the surviving wife only receives one Monthly Survivor Benefit check of $3,725 or $44,700 for the year. When her Husband was still alive, they had combined monthly Social Security income of $5,959 or $71,508 for the year. After he dies, the Wife is left with monthly Social Security income of only $3,725 or $44,700 for the year. Her annual Social Security income has gone from $71,508 to $44,700 – a decrease of $26,0808 – which is a significant decrease. 

Look at the age 66 line.

If the husband claimed his benefit at 66, then dies 82, the one monthly Survivor Benefit check of $4,515, would have provided her with $54,180 of annual Social Security income. That is much better than the $44,700 he would have left her with if he claimed his benefit at age 62. 

From a Survivor Benefit perspective, the best case would be if the Husband had waited to claim at age 70. In this example, the one Survivor Benefit check of $5,959, would have provided the Wife with $71,508 of annual Social Security income. That is much better than the $44,700 had he claimed at age 62 or even the $54,180 if he had claimed at age 66.      

Even he can’t wait until age 70 to claim his benefit, every year he delays claiming past 62, his benefit is guaranteed to increase by a minimum of 6% – 8% per year. Even if he were to delay claiming his benefit for 4 or 5 years past age 62. His benefit will be substantially bigger than what he would receive if he claimed it at age 62. This means he would also leave his wife with a Survivor Benefit that is substantially bigger than the Survivor Benefit he would have left her had he claimed at age 62.

Chances are, for a married woman, the Survivor Benefit is going to play a critical role in maintaining her standard of living. Unfortunately, too many women struggle to make ends meet.

Major Reason Women Struggle After Husband Dies

The major reason why this happens, is because her Husband had the bigger Social Security benefit. Unfortunately, he made a poor Social Security claiming decision. He claimed his benefits as early as possible, at age 62, instead of delaying.

Claiming at 62, not only locks in the smallest Social Security benefit for the rest of the Husband’s life, but it also potentially becomes the smallest Survivor Benefit possible for his Wife after he passes away.

Husbands making better Social Security claiming decisions can greatly reduce the likelihood that their Wives will struggle financially after they die. Once again, assuming the Husband has the bigger Social Security benefit. If he delays claiming it as long as possible, he could maximize the size of his regular benefit. This would also maximize the size of the Survivor Benefit. Every year that a Husband delays claiming his benefit past age 62, he increases the size of the Survivor Benefit he will leave his wife. Wouldn’t that be the greatest gift he ever gave her?