How Will My Wife's Benefit Amount Change If I Die First?

Nov 27 2016 - 10:45am

Hello Larry,
This is a follow-up to a question you answered: I started drawing benefits at age 68, last month. I'm still working. My wife did not get quite half of what my benefit amount was because they said she gets half of only my PIA at age 66, and I received credit for the extra 2 years I worked. (She now gets my age 66 PIA - 40% WEP divided by 2.) These formulas are so complicated and us laymen can not figure them out ourselves. We are at the mercy of the Social Security Administration to give us the "benefit amounts."

If I work to age 70, then die first, how would her benefit change? Since the WEP apparently goes away, her basic benefit amount would apparently be 100% of my age 66 PIA. But what about: (#1) the additional 4 years I worked (to age 70)and (#2) any COLAs from now until then. Will she get credit for neither, either or both of those?

This is very confusing to most of us. Thanks again for any light you can shed on this!

Hi,

First off, there's a causational difference between the types of increases to your benefit rate. Your primary insurance amount (PIA) is determined based on an average of your best 35 years of inflation adjusted earnings. If your PIA (i.e. full retirement age benefit rate) increases due to additional years of higher earnings, your wife's spousal benefit rate would also increase, even while you are living.

On the other hand, if your benefit rate increases because you defer taking benefits between full retirement age and age 70 (i.e. delayed retirement credits), your wife's spousal rate would not increase. However, her widow's rate would include credit for any delayed retirement credits that you earned.

So, as a widow, your wife would receive 100% of your full benefit rate, inclusive of delayed retirement credits and COLAs, and without any reduction for WEP (https://www.ssa.gov/pubs/EN-05-10045.pdf).

Best, Jerry