Give Your Wife a Gift: A Big Survivor Benefit!

If you're turning 62 and you want to give your wife a nice gift, don't claim your Social Security benefit early.

Waiting until your full retirement age of 66 won't make much difference in your household income during the years you're together, but delaying can significantly boost your wife's income after you die, according to a recent study by Boston College's Center for Retirement Research.

Almost all survivor benefits go to wives, who tend to be younger, live longer and have lower earnings than their husbands. The surviving spouse is eligible to receive 100% of the higher-earning spouse's benefit.

However, reviewing data from 1992 to 2004, the three co-authors found that most married men claim their benefits when they're 62 or 63, even though a wife's survivor benefit will be reduced if her husband collects before his full retirement age.

The authors compare two couples. One husband collects a smaller benefit at 62, and the other collects a larger benefit at 66. Assuming both husbands have average life expectancy, the expected present value of benefits-what a lifetime of benefits is worth today-would be the same.

Their wives, however, are better off taking their own benefit at 62, because they'll likely start collecting the larger survivor benefit before reaching their life expectancy.

Over both spouse's lifetimes, the expected present value of benefits of the median couple where the husband collects at 62, was $352,000, compared with $367,000 for the other couple. That means the first couple would receive only 4% less.

Does this trifling difference mean that it doesn't much matter when a husband claims? Only if he doesn't care what happens after he's gone. That 4% "all comes from survivor benefits," says co-author Steven Sass, the center's associate director of research.

While the husbands are alive, both couples can expect to receive close to the same benefits. The widow of the man who claims at 66 will get 25% more in survivor benefits than a woman whose husband claims early--$69,000 comapred to $55,000.

To read the report, When Should Married Men Claim Social Security Benefits?, visit http://crr.bc.edu/preview/when_should_married_
men_claim_social_security_benefits__3.html
(If link isn't clickable, please just copy and paste the whole URL into your browser.) Here you can download a PDF file to read at your leisure.

 

 

 

All rights reserved © SeniorHwy.com | Toni Shrader |contact me: Yahoo: yhopps|TOS|Privacy Notice