One of the redeeming factors of the new Bi-Partisan Budget Act of 2015 is that they did not restrict options for Widows and Widowers, or as some may refer to as Survivor Benefits. You still will be able to claim your own benefit first and switch to a widow(er)’s benefits later, or vice versa.
Some things you need to know about Widow(er)’s benefits are:
- Earliest you can claim is age 60 or age 50 if disabled.
- Must have been married 9 months.
- Can claim at any age if you have child or children in care under the age of 16, or if you are the disabled child of the deceased.
- Can file if you are the ex-spouse of the deceased, if married for 10 years and are single.
- You can remarry after age 60 and still collect this benefit.
Just because you are eligible for this benefit, does not mean it is in your best interest to file. Why would we say that?
- If you are still working, and not Full Retirement Age, your benefit will be hit by the Earnings Limitations rules.
- If you take the benefit at age 60, when most would be technically eligible, it will be automatically reduced by 28.5%.
- If you take the benefit at age 50 and are disabled, it will be reduced by 28.5%.
- If you wait to take at Full Retirement Age, (66 for most of our readers) you will receive 100% benefit, and can continue working without Earnings limitations.
When looking at the combinations of options available for widow(er)’s, it is very important to have this choice reviewed by a professional. Let’s look at an example:
Sam Smith, age 65 died 10/23/2015 with a Full Retirement Age Benefit of $2500
Lisa Smith is 63 and her Full Retirement Age Benefit is $1600.
If Lisa takes her Survivor benefit Early her lifetime maximum benefit will be $713,360. Also if she is working, for every dollar she earns over the $15,720 ceiling, her benefit will be cut $1 for every $2 over the $15,720 amount.
If Lisa takes her Survivor benefit at Full Retirement Age her maximum benefit will be $720,000. No earnings limitations.
If Lisa takes her own benefit at age 65 and then switches to Survivor Benefit at age 66, her lifetime maximum benefit will be $737,920. A $25,000 difference just because she was given good advice on how to file.
In working with clients, we have seen this too often….people are told that the first thing they need to do after a death, is file for their Survivor Benefit, because they are eligible. Whoever told them this was probably just trying to help….but as you see, it can cost you money in the long run.
Those turning age 66 by April 28, 2016, please do not delay in contacting a professional in the area of Social Security claiming strategies….once this benefit is gone, it is gone.
You can contact Pillars LLC at 601-954-0699 or visit our website at www.pillarsllc.com for further information.