Hello Larry and I look forward to purchasing your software as I try to assist my parents through a complicated situation in which my father is eligible for railroad retirement, Social Security retirement and my mother receives retirement from the Teacher Retirement System of Texas....
I'm actually inquiring about a more simple situation though.
Unfortunately, my father-in-law passed away, unexpectedly, this past Friday on his birthday (turned 67) and the family is reeling as you might imagine. Due to some poor advice he had received while briefly off work and before I knew him well enough to discuss finances, he started drawing on his Social Security early (I believe at 64). He remained working for the next couple of years and was still working until his untimely death.
Now we need to get my mother-in-law (age 60) squared away. They moved here 20 years ago from Canada and she never worked a day in the United States. From what I can gather, she is still eligible for 71.5% of his current SS check (not his PIA since he started drawing early). His monthly check was around $2,300 so that would peg her around $1,650, correct?
Secondary, if this is the case, because of the fact he started receiving SS early, there really is no good reason to delay her receiving this benefit as the amount will never be larger than $2,300 (outside of COLA adjustments) It only grows roughly .5% for every month she delays it, until she receives the full 100% of the $2,300 at full survivorship age, correct?
I hope these questions were clear and please don't hesitate to correct my thinking. I just want to have a good clear picture in our head before we go to the SS office to get her setup.
Hi. I'm sorry for your loss. You're incorrect about your mother in law's potential age 60 widow's rate. It would in fact be 71.5% of your father in law's primary insurance amount (PIA) even though your father in law started drawing his benefits early. Reduced widow's benefits are paid at one of three rates when the deceased worker collected reduced benefits prior to their death. The 3 possible amounts are a) the deceased worker's reduced monthly benefit rate, or b) 82.5% of the deceased worker's PIA, or c) the widow's reduced rate based on her age at the time she starts drawing her widow's benefits.
If a widow starts drawing at age 60 their applicable rate would always be 71.5% of the worker's PIA regardless of whether or not the worker drew reduced benefits. Or, if the widow is full retirement age (FRA) or above when they start drawing and if the deceased worker drew reduced benefits, the applicable widow's rate would always be the higher of a) 82.5% of the worker's PIA, or b) the worker's reduced benefit rate. If the widow is between age 60 and FRA when they start drawing, it becomes more complex (https://secure.ssa.gov/apps10/poms.nsf/lnx/0300615322).
By the way, the calculation described above is referred to as RIB-LIM, and our software (https://maximizemysocialsecurity.com/purchase) is fully capable of handling RIB-LIM calculations and benefit options. Your mother in law should strongly consider using the software to fully analyze her options in order to determine her best strategy for maximizing her benefits.
If your father in law didn't start drawing his benefits until age 64 then his reduced rate would be more than 82.5% of his PIA. Therefore, you're right about the fact that it sounds like your father in law's reduced rate would be the most that your mother in law could get as a widow. However, her rate would include all Social Security cost of living adjustments (COLA) that occur after your father in law's death. Your mother in law wouldn't have to wait all of the way until her FRA to be due her husband's full reduced monthly amount, either. In actuality, she'd probably reach that rate at around age 64 if she waits until then to start drawing.
I would strongly disagree with your analysis that there is no good reason for your mother in law to wait past age 60 to claim her widow's benefits. Remember that the reduction for age applied to your mother in law's benefit rate will be permanent, so if she starts drawing at age 60 she'll be locked in at the smallest monthly rate that she could possibly get for the rest of her life. If she instead waits until around age 64 she'll get her highest monthly rate possible for the rest of her life, that being 100% your father in law's reduced rate inclusive of future COLAs. That said, the decision on when to apply is entirely up to her.
One bit of good news I can tell you is that your mother in law's Canadian pension won't reduce her widow's benefits. That's because foreign pensions are excluded from counting as government pensions for purposes of the Government Pension Offset (GPO) provision.
Best, Jerry
