Social Security helps tens of millions of Americans make ends meet. In addition to the retirement benefits that millions of working Americans get after they end their careers, Social Security also helps spouses of workers. Spousal benefits are available to the spouses of workers who are still living, while Social Security pays survivor benefits to surviving spouses of workers who've passed away.
If you're a widow or widower, you may have a choice that most Social Security recipients don't have. Depending on your finances, the right move could put thousands of extra dollars in benefits in your pocket. Below, you'll learn more about this little-known Social Security tip and how it can get you some more cash in your retirement years.
How survivor benefits work
Surviving spouses can be entitled to two different kinds of Social Security benefits. Those who have their own work histories are entitled to retirement benefits in their own right. In addition, those who meet the marriage requirements can receive survivor benefits, based on their working-spouse's earnings record.
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Retirement and survivor benefits have some similarities, but they don't work exactly the same way. You can claim retirement benefits as early as age 62, receiving a smaller amount the longer you claim before full retirement age and a larger amount if you delay as long as age 70. Surviving spouses can claim survivor benefits even earlier, at age 60, with maximum benefits payable at full retirement age.
If you claim both your survivor and your retirement benefits at the same time, you won't get two checks. Instead, you'll get the larger of the two amounts.
However, you don't have to claim your survivor and retirement benefits at the same time. That's the key to potentially getting thousands in extra money from Social Security.
Take one and let the other grow
The strategy that you need to know involves claiming one of your benefits early while letting your other benefit grow. By doing so, you can have your cake and eat it, too. You don't have to wait to get some money, but you also get a higher payout later in retirement when you claim your larger benefit.
For example, take a couple whose earnings were similar during their careers, producing a full retirement-age benefit of $1,500 for each spouse. One spouse passes away, leaving the other to figure out what to do.
Some surviving spouses wouldn't even realize that survivor benefits are available, waiting until the more typical age 62 to claim. At that point, if you claimed both survivor and retirement benefits, you'd get the larger of the two, which would be about $1,195 per month. That benefit would be in place for the rest of your life, adjusted upward each year to reflect cost-of-living increases.
However, another option would involve claiming survivor benefits at age 60 but waiting to claim retirement benefits until they max out at age 70. You'd be eligible to receive $1,073 per month at age 60, giving you a total of around $25,750 in extra money in the two years before turning 62. That would more than make up for the $122 less you'd get in monthly benefits, compared to claiming at age 62.
Even better, though, once you claim your own retirement benefit at 70, you'll get a big raise. Delayed retirement credits beyond full retirement age would lift your monthly payment to $1,860, and you'd get that higher payment for the rest of your life. With extra payments amounting to nearly $8,000 per year, you could end up with tens or even hundreds of thousands more from Social Security in your lifetime.
Don't miss out
Also keep in mind that all of those figures are measured in today's dollars. You'll still be entitled to inflation-adjusted increases along the way.
Social Security has never been more important in providing much-needed financial support for older Americans. By taking full advantage of their Social Security options, surviving spouses can better ensure that their finances will remain in order, even after the death of their closest loved one.
