When retirement planning with a spouse, you may be banking on the fact that both of you will collect your Social Security payments, thus increasing the amount of benefits you’ll collectively get. What many people fail to factor in, however, is the tragic loss of a spouse, and how this would affect your Social Security benefits.
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While most retirement experts tell you to wait as long as possible to collect your Social Security benefits in order to maximize them, a spouse’s passing can impact your benefits in unexpected ways — which Lina Lambert, a retired realtor from California, found out the hard way. Here’s her story, along with what she learned to hopefully help you avoid the same mistakes and make the most of your benefits.
Deciding When To Take Social Security
Lambert and her husband were in their early 60s, close to retirement, and looking at the pros and cons of collecting Social Security at the first qualifying time — at least for her. She was 62 at the time.
“My husband was three and a half years older, so he chose not to [collect] at 62, and we just kept working. Then I turned 62, and we just kept working, always thinking we would be able to collect our Social Security later on together, and then we could pull both of our Social Security [benefits] together and have a fairly good income.”
Keep in mind that the full retirement age (FRA) is between 66 and 67 (depending on your birth year), so claiming Social Security before or after will affect the benefit checks you receive. Delaying claiming benefits until age 70 results in the highest possible benefit, whereas claiming at age 62 will earn a much lower amount.
Lambert’s husband began to collect at age 66, but Lambert, age 62, opted not to. Her husband was able to work a little on top of collecting Social Security. Since Lambert was self-employed and not earning a high income, had she started taking her Social Security at age 62, it would only have been about $900 per month, compared to the $1,700 when she turned 66.
“So when we looked at it for me to turn 62, we thought, ‘You’re only going to get $900 a month.’ That seems like peanuts. ‘Let’s wait until you’re 66 to get the full $1,700.’ Never realizing I would lose it.”
What happened, instead, is that three years later, Lambert’s husband died. Amidst grieving, this threw a serious wrench in her retirement plans.
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How Social Security Benefits Accrue
While each person’s scenario is different, on average, a surviving spouse will get 100% of the worker’s basic benefit amount if they are 66 or older. If they are under full retirement age, but 60 or older, they get between 71% and 99% of the worker’s basic amount.
When her husband died, Lambert, age 65, was not collecting her own Social Security benefits yet, and she had a difficult choice to make guided by the rules of Social Security: Take her own Social Security benefit, around $1,200 by this time, or wait until she turned 66 and get her husband’s spousal Social Security benefits, which were higher at around $2,500.
“If I would’ve taken Social Security at 62 (at $900 per month) we would’ve had a nice income with the two of us, and I would’ve been collecting for those three years that he lived,” she said.
That money could have gone into investments, her retirement account or savings.
Instead of a life where he earned $2,500 per month and she earned $1,200 per month together, the SSA only allowed her to take the highest benefit amount, his, at $2,500. “Then the rest just disappears into the abyss, and nobody ever collects,” she said.
How To Prepare for a Spouse’s Loss
You don’t want to think about anybody dying, Lambert said, but it happens and in the worst-case scenario, there is a chance that you lose your survivor benefits if you don’t start taking them as soon as you can.
She said it’s not greedy to say, “I earned this money, and I should take it,” as early as age 62.
“You hope it never happens, but should it happen in the unlikely event that one of you dies, at least you have collected some money,” she said.
Do the Math
Lambert wished that she and her husband had done a better job of sitting down to do the math and project how much that could have added up in the long term.
“My advice is taking the time to explore different angles and evaluate them and not discount them so quickly just because it’s not as much money as you would think,” she said.
Educate Yourself on Social Security Rules
Additionally, she urged people to study the Social Security and Medicare rules very closely.
“If you make the wrong decision, it could affect you permanently.”
While everyone’s situation is different, Lambert’s case shows that the better you can be prepared for all possible scenarios in retirement, including the loss of a spouse, the better off you’ll be.
Caitlyn Moorhead contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: I’m Retired and Regret Not Taking Social Security at Age 62 — Here’s Why
