Does My Plan Make Sense?

Jan 17 2017 - 3:15pm

I am a widow (DOB 3/11/53) who is still working earning $40,000 per year. I intend to continue working until age 66. My current PIA est. is $1,131/mo. and at age 66 is $1,307/mo.. My husband (ten years older) died at age 60. My est. Widow PIA today is $1,551/mo. and at age 66 is $1,340/mo.(less?). I have been told to start benefits today based on my earnings PIA subject to the earnings test and then at age 66 (3/2019) switch to my survivor's benefits. Does that make sense?

Hi,

Maybe, but it's not possible that your widow's benefit rate would be more now than if you started drawing it at age 66. Just to clarify, PIA stands for primary insurance amount, and it is essentially the unreduced benefit rate payable at full retirement age. And, if your full retirement age rate (PIA) on your own record is $1,307, your reduced benefit rate would be about $1,118 if you file this month.

Since I don't know the correct widow's benefit rates, I can't tell you what strategy is best. However, your best option is likely one of the following:
1) File for reduced retirement benefits on your own record now, then file for unreduced widow's benefits at age 66; or,
2) File for reduced widow's benefits now, and then switch to retirement benefits on your own record at age 70.

It will likely be best for you in the long run if you wait to take the higher of the 2 benefits last. Your widow's benefits would be at their highest rate if you start them at age 66, but your own benefit rate would be 32% higher than your PIA if you delay taking them until age 70. So, if your PIA is $1307, your retirement benefit rate starting at age 70 would be $1,725. And, if your widow's PIA is less than that, it may be best to start drawing reduced widow's benefits now, then switch to your own record at age 70.

What you should do first is check back with Social Security to verify the correct PIA on your husband's record. Then, you'll probably want to consider running the maximization software available on this website in order to determine your best filing strategy. The maximization software can calculate your own benefit rate, but you'll need to input the correct widow's rate. The software is also programmed to consider the effect of the Social Security earnings test (https://www.ssa.gov/planners/retire/whileworking2.html), and you'll want to be sure to accurately estimate your expected yearly earnings. You'll want to take these actions ASAP, because you can't claim reduced Social Security benefits retroactively, and failing to file an application by the end of this month could end up costing you money.

Best, Jerry