Sunday evening, a friend invited me to have dinner at her house with a group of widows ages 61-73. They wanted someone who would answer some questions about Social Security and Medicare clearly and directly.
Of course, very little of your finances happen in silos, and the typical response to most questions is, “It depends.” However, I tried my best to answer each question briefly. Ultimately, I think they had more questions than we had time. So, I am writing because these questions come up often.
Before we get into the specific scenarios, we have an article on deciding when to take Social Security in which we detail some of the basics. Please review that if you need a basic foundation. We also have a brief video explaining why you might not want to go this alone. Now, on to the scenario.
Here’s the scenario: A 61-year-old widow is no longer working. Let’s call her Jane. Jane’s Social Security benefit is identical to her late husband’s, John. Each of their full benefit is $20,000 annually or $1,666 per month.
Question: Whose record will she file?
Answer: His first, and she can file immediately because she is 61 (she only needs to be 60 for Survivor benefits). Remember that these benefits will be reduced because she is not yet full retirement age. According to the SSA.gov calculator, those benefits will be reduced to $1,180.
Jane would get $1,180 monthly until she changes and files on her own record. If she delays her record until age 70, it will increase to $2,090 for the rest of her life.
In other words, she could get $1,180 per month for 9 years (of course it adjusts each year for inflation), and then $2,090 for the rest of her life (also adjusts).
There is a big "what if" with all of this. Actually, there are several big "what ifs".
What if Jane is still working?
What if Jane receives TRS or another government pension? (Spoiler, there is a Government Pension Offset...reducing your benefit)
What if the benefits are not similar? Meaning John's is much higher, or maybe Jane's is much higher?
These questions, among several others, offer nuances that must be accounted for. These may not be life-altering, but they certainly will impact you for the rest of your life. Once you pull the trigger on SS distributions, you cannot go back.
Next, I will address the income limits on taking SS before you reach full retirement age. Once you reach full retirement age, you can make as much money as you wish without income limits.