Advanced Underwriting Consultants

Ask the Experts – July 10, 2014

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers. Here’s the question of the day.

Question: If my client files for early Social Security retirement benefits at age 62, will she receive a reduced survivors benefit if her husband predeceases her?

Answer: No. The fact that your client files early for her own retirement benefits does not affect her potential future survivors benefits. In other words, an individual can file for her own benefits at age 62 and switch to survivor benefits after her spouse’s death after she reaches full retirement age (FRA) without seeing a reduction in survivors benefits.

A surviving spouse generally receives the amount the deceased spouse was receiving from his own Social Security benefits at the time of his death. If the deceased spouse was receiving reduced benefits, the survivors benefit is based on that reduced amount. Conversely, any delayed retirement credits (DRCs) accumulated by the deceased spouse will increase the survivors benefits.

On the other hand, if a surviving spouse files for survivors benefits prior to FRA, her survivors benefits will be reduced; however, filing for her own retirement benefits before FRA has no effect on her survivors benefits.

Here’s an example. Wife’s FRA is 66, and she has earned a primary insurance amount (PIA) of $800 per month. She files for benefits at age 62, receiving $600 per month ($800 PIA reduced by 25% early retirement reduction). Husband’s FRA is 66, and he has earned a primary insurance amount of $2,000 per month. He files for his own benefits at age 70, receiving $2,640 per month ($2,000 PIA increased by 32% DRCs). If the husband dies and the wife has reached FRA, she will be entitled to $2,640 in survivors benefits (replacing her own benefit amount of $600 per month).

Have a question for the professionals at AUC? Feel welcome to submit it by email. We may post your question and the answer as the question of the day.