Hi Jerry. You were kind enough to answer a previous question from me relating to spousal benefits which helped a lot. Thank you. I've moved over to the survivor benefit portion of the "death kit" I keep for my wife and my head is spinning. I'm trying, thus far in vain, to map a plan and give her an idea of what to expect should something happen to me. I've tried to find the right answer but have returned hat in hand.
We're both 60. She's in good health; I am not. My FRA PIA is $1610. Her FRA PIA is $504.
It's my understand that if I die anytime before my FRA, and have NOT yet filed for benefits, she'll receive a percentage of my FRA PIA based on when she files -- 71.5% if she files at age 60 and 100% if she waits until age 66y 2m (her FRA for survivor purposes).
But what happens if I file at 62, and then die shortly thereafter. My reduced PIA for taking retirement at 62 is $1173, the amount I'd be receiving at the time of passing. According to SSA her "penalty" for taking a survivor benefit at 62 is 81% of my PIA. If she waits until 64 it's 90% of my PIA . . . but a percentage of which PIA, the FRA PIA of $1610 PIA or my reduced PIA or $1173 becaused I filed at 62?
Asked another way, say I make it to 64 and then file. My reduced PIA for filing at 64 would be $1350. If I die at age 66, and my wife then files for her survivor benefit at her FRA, will she receive 100% of my FRA PIA of $1610 or my reduced PIA of $1350?
And does this 85 1/2% "widow cap" rule I've read about, which I won't pretend to understand, come into play at any point?
I hope you're getting lots of warm fuzzy feedback from the public for answering all the myriad questions submitted your way. It's truly a welcome and needed service. It's clear from talking with friends of a similar age most are as confused as I am when it comes to navigating SS. I'll be purchasing the software soon (and hope you're all making a mint) but I'm anxious to get some of the basics clear in my head for an upcoming family meeting with my wife and adult children.
Thanks again and God bless,
Matt
Hi Matt,
I'm sorry to hear about your health problems.
If you start receiving reduced retirement benefits, it will limit the amount of widow's benefits that your wife could receive to the higher of your reduced benefit rate or 82.5% of your full retirement age rate (PIA). This is referred to by Social Security as the RIB-LIM provision. I'll give you an example based on the PIAs cited in your question.
Say your PIA is $1610, but you take benefits at 62 and receive $1173 (i.e. roughly 72.8% of your PIA). If you died before your wife, the highest possible widow's benefit she could receive would then be $1328, or 82.5% of your PIA. But, if you started reduced benefits at age 64, your monthly benefit rate would be about $1341 (i.e roughly 83% of your PIA). In that case, if you died before your wife, her highest possible widow's rate would be $1341, since that is more than 82.5% of your PIA. Or, if you waited until age 70 to start drawing your benefits, your monthly rate would be about $2060 (i.e. 1.28 x $1610), and that would also be your wife's maximum widow's benefit rate.
The RIB-LIM formula is much too involved for me to fully explain in a Q&A. There are simply too many variables involved. Suffice to say that if you are concerned about your wife having enough income to live on in the event of your death, you would want to wait to start drawing your Social Security until age 70 if possible. The maximization software on this website is fully programmed to handle RIB-LIM, so you will likely want to run that before making any filing decisions.
Best, Jerry
