Ask Rusty – I’m Terminal; What Are My Wife’s Options as My Survivor?
Dear Rusty: I’m 60 and my wife is 62. I have terminal Stage IV prostate cancer, but my wife is in pretty good health. If I draw at 62 would that affect my wife’s survivor benefits? When should she start to withdraw? Also, when I die what would she get? Would she get her SS and then something of mine? Or must she choose between keeping hers and taking my survivor benefit? Please assist - I don’t have much energy anymore. Signed: Running on Empty
Dear Running on Empty: Sorry to hear of your illness and I commend you for planning ahead for your wife. As your surviving widow, your wife’s survivor benefit will be based upon the amount you were receiving at your death, but it will also be affected by her age when she claims it. So, yes, if you claim at age 62 it will mean a smaller widow’s benefit than your wife might otherwise get if you waited longer. But there is also a special rule, known as the “widows limit” which will affect your wife’s survivor benefit. The widow’s limit stipulates that the minimum benefit your wife will receive as your survivor is 82.5% of the amount you would have been due at your full retirement age (67). So even if you claim at age 62 and take a 30% cut in your own benefit, your wife will still get 82.5% of what you were entitled to at your full retirement age (FRA). However, as I said, your wife’s survivor benefit amount will also be based upon her age when she claims it, and she isn’t required to claim it immediately upon your death.
Your wife’s survivor benefit as your widow will reach maximum when she reaches her own full retirement age, and if she claims it prior to her FRA, it will be reduced 4.75% for each full year earlier than her FRA. But if her benefit as your widow will be more than her own SS retirement benefit, she can take (or continue to receive) her own SS benefit and wait until her survivor benefit reaches maximum at her FRA. Or alternatively, if your wife is not yet collecting her own SS benefit, she could choose to let her own benefit grow and reach maximum at age 70 and take her smaller survivor benefit first. She will get whichever benefit is more - her survivor benefit or her own, and she will have a choice of which one to take and when to choose it.
Finally, depending upon the extent of your disability, you may wish to consider applying for Social Security Disability Insurance (SSDI) benefits earlier than age 62. Advanced prostate cancer is on Social Security’s Compassionate Allowance List, and this would expedite processing of your SSDI application, resulting in a decision within a few weeks instead of a few months. Doing so would not affect your wife’s claiming options upon your death, and it may make her survivor benefit higher because your SSDI benefit would be based on your FRA benefit entitlement.