Does My Annual Earnings Stop Me From Receiving Widow's Benefits?

Category: 
Jan 11 2019 - 10:12am

My yearly income from my job is $32,000.00 a year. Does this stop me from receiving widows benefits?? My husband was 69 years old when he passed away and was drawing his Social Security. I turn 60 this year. Thanks

Hi,

I'm sorry for your loss.

Your earnings are high enough to cause at least some of your widow's benefits to be withheld, but you might be able to draw benefits for part of the year depending on your benefit rate (https://www.ssa.gov/planners/retire/whileworking.html).

For example, say Mary becomes eligible for widow's benefits at age 60 effective January 2019. Mary's deceased husband's primary insurance amount (PIA) was $2009, and Mary receives a reduced rate of 71.5% of that amount, or $1436, in return for starting her benefits early. Mary is continuing to work and will earn $32,000 in 2019. Social Security is required to withhold $1 of Mary's benefits for each $2 that she earns in excess of $17,640 this year, which amounts to $7180 in Mary's case (i.e. ($32000 - $17640)/2). To recover that amount, Social Security would withhold Mary's entire check of $1436 for the first 5 months of 2019. Mary could then be paid her full monthly payment of $1436 for the last 7 months of 2019.

However, if Mary in the above example would have reached age 60 in August of 2019 or later, she couldn't be paid any benefits for 2019 because she'd only be due benefits for 5 or fewer months of 2019. Therefore, all of her 2019 benefits would need to be withheld due to the earnings test.

Whether or not filing for widow's benefits at age 60 would be a good strategy for you depends on the relative benefit rates that you could draw as a widow or on your own record, and how much you'll be earning between age 60 and your full retirement age. Your optimal filing strategy would likely be one of the following:
1) File for reduced widow's benefits at age 60 or as soon as your earnings will permit at least some benefits to be paid, then switch to your own record at age 70; or,
2) File for reduced retirement benefits at age 62 or as soon as your earnings will permit at least some benefits to be paid, then file for unreduced widow's benefits at your full retirement age (FRA). However, if your husband started drawing his benefits prior to his full retirement age, then it would likely be more advantageous to file for widow's benefits at some point prior to your FRA.

Normally, you would want to start out drawing the lower benefit first and then switch to the higher record when it reaches it's highest potential rate. Our maximization software could sort all of this out for you and help you determine your optimal strategy.

Best, Jerry