My husband who had taken early retirement died last year. I just turned 60 and work full time so would lose widow benefits to the earnings test. I make more than my husband did and will take my retirement at 70. SSA tells me there is no advantage to filing for widow benefits until I stop working. I plan to quit at 65. Are they correct? I read our example about Glenn Loury in your book and it implies I should file now even if i don’t get anything. Thank you

Hi,

I'm sorry for your loss.

The answer to your question depends on how much you are earning. There's no reason to file any sooner than when your earnings will permit at least some benefits to be paid, but you could lose benefits if you don't file and it turns out that your earnings would have allowed you to draw benefits sooner. Basically, it sounds like you'd want to file for your widow's benefits as soon as it would permit you to be paid at least some benefits, but filing any sooner than that could simply result in your receiving a lower monthly widow's rate when you do eventually start drawing.

For example, say Jane turned age 60 in January 2018 and is eligible for widow's benefits. Jane's reduced widow's rate at age 60 would be $1000, however, Jane is still working and will earn $40,000 in 2018. The Social Security earnings test would require withholding of $1 of Jane's benefits for each $2 that she earns in excess of $17040 in 2018. In Jane's case, that would amount to $11480 (i.e. ($40000 - $17040)/2).

In the above example if Jane had filed for her benefits in January 2018, Social Security would withhold the required amount of $11480 from her total 2018 benefits of $12000 (i.e. $1000 x 12), leaving $520 payable to Jane. However, if Jane didn't file until July 2018 her benefit rate would be slightly higher at $1031, but she couldn't be paid any benefits for 2018. The reason that her benefit rate would be higher is because Jane was 6 months closer to her full retirement age (FRA) when she claimed benefits, and the reason that she wouldn't be due any benefits in 2018 is because her total benefits of $6186 (i.e. $1031 x 6 months) would be less than the $11480 required to be withheld under the earnings test.

Bottom line, the best option in your case depends on both your potential benefit rate and the amount that you will be earning between now and your FRA. Another potentially important factor in your case is the fact that your husband drew reduced retirement benefits prior to his death. As a result of that, the most that you could be paid as a widow is the higher of a) the reduced benefit rate that your husband would be receiving if still alive or b) 82.5% of his full retirement age rate, or primary insurance amount (PIA). You should strongly consider using our maximization software to sort all of this out for you and help you determine the optimal time for you to claim your benefits.

Best, Jerry