Social Security is a vital program supporting tens of millions of retired Americans. To qualify, you need to work for 40 quarters and earn at least a certain modest sum in each quarter. Most people qualify after 10 years of work.
The size of your monthly Social Security benefit check is directly tied to how much you’ve earned during the 35 years in which you earned the most money (adjusted for inflation). So you will want to work more than 10 years.
Each of us has a “full retirement age” — the age at which we’re eligible to start receiving the full benefits to which we’re entitled, based on our earnings history. It’s 66 or 67 for most workers today, and 67 for anyone born in 1960 or later.
You can start collecting your retirement benefits as early as age 62. Doing so may mean your benefits are reduced, but you’ll receive many more checks than if you hadn’t started early, so starting early isn’t that bad.
If you have sufficient funds to support yourself in retirement, you can delay when you start to collect your benefits to beyond your full retirement age and they will grow by about 8% for every year you do so, up to age 70. Strategically choosing when to start Social Security is one of several ways to increase your benefits.
Now let’s get to the unfortunate scenario of the death of one person in a marriage. Imagine John and Joan, who have been married for 30 years. John has been the higher earner, and he collects $3,330 per month from Social Security — amounting to roughly $40,000 over a year.
Joan has a much more modest Social Security benefit, in part because she earned lower wages and also because she was out of the workforce for some years, caring for others. Her monthly benefit is just $1,841 — roughly $22,000 per year. (By the way, $1,841 is the average Social Security benefit, as of September.)
Together, John and Joan have been receiving about $62,000 in total Social Security benefits over the course of a year — $40,000 plus $22,000. (Benefits are increased in most years with cost-of-living adjustments, or “COLAs.”- cost of living adjustments)
Now imagine that John dies. Many people would assume that poor Joan will have to manage without John’s hefty Social Security benefit and will be left with just her $22,000 for the year. Not so!
It is true that when one half of a couple dies, only one Social Security benefit check will be arriving each month, instead of two. But it’s not necessarily the benefit of the surviving spouse. Instead, the survivor can choose to select the higher survivor benefits based on the deceased spouse’s work history. That often allows the survivor to collect close to what the deceased spouse was receiving — $40,000 per year in this case, instead of the $22,000 based on the survivor’s work history.
Those who are married would do well to strategize and coordinate Social Security decisions. Think back to our John and Joan scenario, for example. While they were both alive and approaching retirement, they may have been wondering when each of them should claim Social Security benefits. One sound strategy would have been to try to delay claiming John’s bigger benefit, until he hit age 70 if possible, to maximize it. That way, should John die first, Joan would be left with as big a benefit as possible.
The more you read up on and learn about Social Security, the savvier decisions you can make regarding it, and the more you may get out of it. Be sure that Social Security considerations are part of your overall retirement plan. Seek advice before making any important retirement decisions.