Social Security Math After a Spouse Gets Cancer Diagnosis

Even the best prepared retirees can face unexpected monkey wrenches, often of the medical variety.

A recent caller into The Retirement and IRA Show explained his predicament. “We had what we thought was a solid Social Security plan, but I’ve just been diagnosed with liver cancer, and that is certainly changing our original plans of both living into our 90s.” His wife, age 63, expects a $500 monthly benefit at her full retirement age of 67. The husband’s benefit would be $4,000 at age 67. They have $600,000 in a brokerage account, $800,000 in traditional IRAs, and $800,000 in Roth IRAs.

The original plan had the wife claiming at 67 and the husband waiting until 70. The caller’s revised theory: have the wife apply now on her own record, and if he passes in the next few years, have her wait until he would have been 70 to claim a survivor benefit.

Podcast host Chris Stein offered encouragement and clarification. “Hopefully you’re with us for quite a bit longer and you make it to 70 and beyond, and your original strategy might still pretty much be intact,” he said. “I would assign a high importance level to your wife retaining as large a Social Security benefit as possible for longevity purposes, living well into her 90s. And that is achieved by your benefit being as large as possible.” The way to accomplish that? Delay starting benefits to age 70, or as long as the husband lives.

The caller worried his wife would be locked into a reduced survivor benefit. “If you were to die before your full retirement age because you hadn’t claimed, there’s no penalty for that,” Stein said. “She won’t be stuck with a less than your [primary insurance amount]. That widow’s limit you’re talking about only applies if you claim before your full retirement age and then pass away later, and she kind of inherits your survivor benefit, which was reduced by early claiming.”

The caller also assumed his wife should wait until he would have been 70 before claiming a survivor benefit. “It has nothing to do with her waiting until you would have been 70,” Stein said. The reduction for claiming a survivor benefit early is measured against the surviving spouse’s own full retirement age, not the deceased spouse’s age.

Stein’s advice: “Her claiming now would seem to make sense because, yes, it will be reduced. She’s 63, but it’ll be a few extra dollars of extra income coming in while you’re still around. … The fact that it was reduced for early claiming is irrelevant because she’s only going to claim it until she switches to your survivor benefit at her full retirement age.”

Co-host Jim Saulnier added: “I’m sure there’s plenty of reasons for you to try to stick around as long as you can beyond the Social Security benefit. But [with] that effort … you’re creating this largest Social Security benefit for her as possible.”