When you plan to retire with a spouse, you can count on the fact that you will both collect your Social Security benefits, thereby increasing the amount of benefits you will receive collectively. What many people fail to consider, however, is the tragic loss of a spouse and how that would affect your Social Security benefits.
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While most retirement experts tell you to wait as long as possible to collect your Social Security benefits to maximize them, the death of a spouse can affect your benefits in unexpected ways — which Lina Lambert, a retired realtor from California, found out the hard way. .
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Deciding When to Get Social Security
Lambert and her husband were in their early 60s, nearing retirement and seeing the pros and cons of collecting Social Security at the first qualifying time — at least for her. She was 62 years old at the time.
“My husband was three and a half years older, so he chose not to do it [collect] in 62 and we just kept working. Then I turned 62 and we just kept working, always thinking we’d be able to collect our Social Security later together, and then we could draw both of our Social Security [benefits] together and have a pretty good income.”
Lambert’s husband started collecting at age 66, but Lambert, 62, decided not to.
Her husband was able to work part time to collect Social Security. Since Lambert was self-employed and did not earn a high income, if she had started receiving Social Security at age 62, it would have been only about $900 a month, compared to $1,700 when she turned 66.
“So when we looked at me turning 62, we thought well, ‘You’re only going to get $900 a month.’ That just seems like peanuts. “Let’s wait until you’re 66 to get the full $1,700. “I never knew I’d lose it.”
What happened, instead, is that three years later, Lambert’s husband died. Amidst the grief, this threw a serious wrench into her retirement plans.
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How Social Security benefits increase
While each person’s individual scenario is different, on average, a surviving spouse will receive 100% of the employee’s base benefit amount if they are 66 or older. If they are under full pension age but 60 or over, they get between 71% and 99% of the employee’s basic pay.
When her husband died, Lambert, 65, wasn’t yet collecting her Social Security benefits, and she had a tough choice to make under Social Security rules: Take her Social Security benefit, about $1,200 until this time, or wait until she turns 66 and receives her spouse’s Social Security spousal benefits, which were higher at about $2,500.
“If I had taken Social Security at 62 (at $900 a month) we would have had a good income with both of us and I would have collected for the three years he lived,” she said.
That money could have gone into investments, her retirement account or savings.
Instead of a life where he earned $2,500 a month and she earned $1,200 a month together, the SSA allowed him to receive only the higher benefit amount, his, at $2,500. “Then the rest just disappears into the abyss and no one ever collects,” she said.
How to prepare for the loss of a spouse
You don’t want to think that someone is going to die, Lambert said, but it does happen, and in the worst-case scenario, there’s a chance you could lose your benefits if you don’t start getting them as soon as you can.
She said it’s not greed to say, “I earned this money and I have to take it,” as early as age 62.
“You hope it never happens, but if it does in case one of you dies, at least you’ve raised some money,” she said.
So, the math
Lambert wished she and her husband had done a better job of sitting down to do the math and predict how much that might have added up.
“My advice is to take the time to explore different perspectives and appreciate them and not discount them so quickly just because it’s not as much money as you’d think,” she said.
Educate yourself on Social Security rules
Additionally, she urged people to study the rules for Social Security and Medicare very closely.
“If you make the wrong decision, it can affect you forever.”
While everyone’s situation is different, Lambert’s case shows that the better prepared you are for all possible scenarios in retirement, including the loss of a spouse, the better off you’ll be.
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This article originally appeared on GOBankingRates.com: I’m Retired and Regret Not Taking Social Security at 62 – Here’s Why
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