A Plan For Widow(er)s
My wife is 4 years younger than me. Thus, it’s easy to predict she will survive me. I’m a man and older. Go to a nursing home and look around, not many men.
She needs to have a plan for when I’m gone. And this is something I think about..a lot.
Where does a widow go for proper guidance? The Social Security Administration? Well, unless you’re new to my email list, you’ll know how I feel about that. Just watch this video from my Youtube channel on how the Social Security Administration CONTINUES to shortchange widows even though they’ve been informed about what they’re doing for years!
In fact, one of my friends just asked me a question this morning about a strategy for taking her OWN benefit vs. her SURVIVOR benefit. So, as I typically do, I go to my go-to person on all things Social Security, Elaine Floyd, and read her posts. Thousands upon thousands of answers Elaine provides to financial advisors. (I’m interviewing Elaine for my podcast in September, by the way. I’ll keep you posted.)
“Widow client, just turned 62, wants to file early on her own record and restrict her application to allow her Survivor benefit under her husband’s record to grow to her her FRA. When she went to the SS office the associate told her that if she filed early for hers it would “freeze” her Survivor benefit and she wouldn’t be able to get the full amount at her FRA.
Did she just receive bad info from the SS office or is there something that I’m missing?”
“She got wrong information from SSA. Survivor benefits are not included in deemed filing. She should go ahead and file for her own retirement benefit.”
If I told you how many times I’ve heard,read and been told “She got wrong information from SSA…” you’d never talk to me again, because I’d do ALL the talking!
By the way, notice the word “she” in Elaine’s answer. Very rarely do I hear “He got wrong information from the SSA.” Why? Because generally the man files his benefits under normal conditions and dies before his wife does. For the man there are not many rules to contend with. Pretty simple. (Truly, it shouldn’t be, but if you’re dead set on filing at 62, you don’t have much planning to do.) It’s the surviving wife who’s left to figure things out.
So, what’s the point of this email?
Simple. Understand the difference between your OWN benefits, your Spousal Benefits and your SURVIVOR benefits!
The rules have changed for your benefits and your spousal benefits due to the bipartisan legislation signed in 2015 by President Obama. The rules have NOT changed for SURVIVOR benefits though.
This mean if you are a widow you can take your own benefit early. That is the benefit you earned by your own work history. This benefit will be reduced, but come your Full Retirement Age (FRA) you can switch out to your SURVIVOR benefit which is not reduced. My friend is considering this exact option as we speak and our discussion is what prompted me to write this email.
Her reduced benefit on her own record is $1100 a month but her SURVIVOR benefit will be $2300 a month at her FRA, at 66. If she so chooses, she can get her own benefit now and then in 4 short years get more than double by switching to her SURVIVOR benefit!
Yet, the good folks at the SSA will most likely say “just get your survivor benefit now, because it’ll pay more.” And that is correct. It will pay more NOW, but much, much less in the future. They are trained to maximize your benefits for today, not for the future.
If she took her Survivor Benefit now it would be around 80% of that $2300, or $1840, and she’ll NEVER get any of her own benefit at all. So if she sacrifices $700 a month for 4 years because she’s taking a reduced benefit off her own record, she’ll be in a much stronger financial position. Given she’s in good health, she’s going to be around for quite some time. And we don’t want her eating Ramen Noodles at 82!
I have a ton of videos on my Youtube channel that talks about this. Here is the playlist just for Social Security Planning. I invite you to visit the channel. In fact I encourage it. You can see all the comments on there from people about their own planning, maybe people in a similar circumstance as you.
Please have a plan for your surviving spouse. Put something together so she can at least have one less hurdle to jump when she is on her own.