Social Security Q&A: If I Work till 70, Should I Collect Survivor's Benefits at 60 or 66?

Commentary by Laurence Kotlikoff

Source: Forbes

Social Security may be your largest or one of your largest assets. How you manage it, by deciding which benefits to collect and when, can make an absolutely huge difference to your lifetime benefits. And those with the highest past covered earnings have the most to gain from maximizing their Social Security.

I’ve been answering questions and writing columns about Social Security each week for the past two years on PBS NEWSHOUR’s website. The editors at Forbes asked me to post a Q&A each day from those columns. To see all my columns, please go to my software company’s site, www.maximizemysocialsecurity.com, and click More Press below the WSJ quote.

Today’s question is about how to best sequence filing for survivor and retirement benefits when working till 70. It involves the Earnings Test and the Adjustment of the Reduction Factor as well as how the survivor and retirement benefits are determines.

Question: Garland, Texas: I’m recently divorced for the second time. I was married to my first wife for 13 years before we divorced. She then passed away. Should I try to collect survivor benefits at age 60 or 66? I’m planning to work until age 70.

Answer: You probably want to wait until 66 to collect your survivor benefit and until 70 to collect your retirement benefit. If you start collecting your survivor benefit at 60, this benefit may be lost due to the earnings test. However, once you reach full retirement age, the earnings test ends and, at that point, Social Security will readjust your survivor benefit to compensate you for the months of benefits you took.

If your ex was the higher earner, your survivor benefit may exceed your own retirement benefit, in which case your benefit at 70 may not change. In this case, Social Security will give you your retirement benefit starting at 70, but they will reduce your survivor benefit dollar for dollar, leaving you with the same total benefit you were getting before. Stated differently, they will redefine your survivor benefit to be your excess survivor benefit, which will equal your original survivor benefit less your retirement benefit.