Women Can Get More Income by Paying Attention to Their Social Security Survivor Benefit

Women can get more income by paying attention to their Social Security survivor benefit

Women need to pay close attention to how their husband chooses his Social Security income benefit. His election decision can significantly affecthis spouse’slifetime income even after he’s passed on. On average, women tend to die at least several years later than their husband. Therefore, statistically women tend to “inherit” their spouse’s Social Security incomestream after he passes. So,his Social Security income election choice can directly affect his wife’sfuture lifestyle.

In this era of reduced retirement pensions, economic uncertainty, and low-interest bearing account yields, maximizing theirSocial Security benefit takes on a heightened importance— especially for women who statisticallytend to outlive their partners.

A spousemight ask how the Social Security survivor income benefitswork. If both spouses are receiving their income benefit and one spouse dies, the surviving spouse receives the higher of the two monthly income checks.

Let’s look at the case of Jim andLinda. They both are approaching the Social Security eligibility age of 62. Let’s further assume that Jim lives to age 77, and Linda to age 93. In the first scenario, Jim claims his Social Security income of $1,725 at age 62. Linda is drawing a much smaller age 62 benefit amount of $300 per month. When Jim dies, Linda then receives the higher of the two benefit income amounts, or $1,725 per month.

If Jim waits to claim his Social Security income benefit, it will build roughly 6% between age62 and 66. For those born between 1943 and 1954, they will receive 100% of theirSocial Security income benefit at age 66 (source: Social Security). Jim’s income benefit steps up even more between ages 66 and 70, about 8% a year. Also, these inherent step-ups (technically referred to as delayed retirement credits) can increasebyan inflation factor as well. Consequently,each year of waiting to claim Social Security can potentially result in an annual income check increase of roughly 8% to 11% as time marches on.

In the second scenario, Jim waits andelects his Social Security at age 70. Jim then receives $3,036 per month rather than $1,725 if he had elected at 62. When Jim passes on, Linda will now receive$3,036 per month, or $1,311 more per month than if Jim had started receiving his benefit at age 62.If Jim elects at 62, Linda receives a total of $331,200 during her 16 years as a widow. If Jim elects at age 70, Linda receives $582,912 during the same period. Linda receives an additional $251,712 of lifetime income if Jim delays his Social Security income election until age 70.

On average, women typically outlive men by about threeto four years. In this case, Linda outlives Jim by 16 years. And once a healthy female reaches age 65, she has a one in four chance of living to age 94. So based upon statistics, women should pay particular attention to how and when their husband chooses his Social Security income election, especially if she expects to enjoy a long lifespan. Making a wise Social Security election can help maximize what could be one of the strongest retirement income streams available to a widow or widower.

For a couple, the benefit of waiting to collect Social Security and applying a tactical election strategy can mean as much as $100,000 in additional retirement and survivor income over their lifetimes.There are strategies such as the “File & Suspend” and “Claim Some Now, Claim More Later” that can help couples maximize their Social Security retirement and survivor incomestream.Couples may wish to consider contacting a qualified Financial Advisor to help guide them through the Social Security income election maze and help them develop the best election strategy for theirown situation.

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John/Jane Last Name is the Title of XYZ Financial Firm. He/She is a Title/Registration and offers securities through XYZ Financial Services, Inc. Member FINRA/SIPC, located in XYZ/town XYZ/State. John/Jane has multiple X, Y, and Z securities and supervisory licenses and nearly X years experience in the financial services industry.

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John/Jane assists his/her clients and educates other professionals with financial planning and retirement transition issues such as Social Security income planning (add your specific practice specialties), retirement planning, portfolio diversification, . . . John/Jane’s primary specialties are helping families optimize their Social Security Income election & effectively managing their 401k, IRA, and nest egg retirement assets and income sources.

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