If I’ve heard it once, I’ve heard it a thousand times. “I think I’m going to file for Social Security early. I mean, what if I die?”
This statement is usually made by a man and is followed by recounting family member’s death ages for the past two generations.
It’s time to put an end to this silly thinking.
Ok, men have a valid point when they say “what if I die?” The problem is, they’re looking at it all wrong. As a guy, this brings some pain to write this, but the truth is we probably will die. In fact, we’ll likely die before our spouse and maybe much earlier than we’d like.
There’s an interesting statistic found when you extrapolate marital status and death from the US Census Bureau. It seems that 80% of women die single. That is almost exactly opposite for men. Only 20% of men die single! Why? It’s because we generally die first!
So, instead of a somewhat self-centered “what if I die?” question, it should be “when I die, how will my spouse’s income be impacted?”
One of the main things that change when a spouse dies is the Social Security benefit. One of the benefit payments will go away and household income from Social Security will decrease. How much it goes down is somewhat in your control.
I think that the survivor benefit available to spouses (and sometimes ex-spouses) is one of the most generous benefits from Social Security. As long as the length of marriage rules are met, the surviving spouse will receive the highest of either his/her own benefit or the benefit of the deceased. In families where benefit amounts weren’t equal, retaining the highest benefit can make an enormous lifestyle difference.
Planning your Social Security filing strategy should always include careful consideration of optimizing the survivor benefits.
Here are two reasons.
1. Men’s Benefits Are Higher
According to the Social Security Administration, the benefit payable to a male in 2014 was 33% higher than those payable to females. If your family’s benefits are close to the Social Security average, the husband’s higher benefit will become the survivor benefit at some point. That means that the credits for filing later, or reductions for filing early, will have a larger impact on the when applied to the highest benefit.
This statistic clearly illustrates the importance of a strategic Social Security filing plan. Increasing the survivor benefit should be one of the top considerations when you are deciding when and how to file for Social Security.
2. Social Security Income is More Important to Women
Once males die, it seems as if some of the income sources die with them. According to the Social Security Administration, single women over 65 depend on Social Security for over half of their income. Men in the same group only depend on Social Security for a little over a third of their income.
Simply put? Social Security is more important to women than it is to men. The survivor benefits that males leave behind is more than just extra income. It could be the difference in safe housing, reliable transportation or just paying the bills.
I can’t tell you how many times I’ve seen a widow left with reduced survivor benefits because her husband filed for Social Security early. In many cases this permanent reduction was several hundred dollars per month or more.
I know it’s tempting. There’s a thousand reasons to file early. There’s several good reasons to file later. One of the best? Not impoverishing your spouse.
Think it through before you file.