11 Jan When a spouse dies, what happens with Social Security?

Q. My wife and I are both 71 and each of us receives about $1,500 per month from Social Security. When one of us dies, will the survivor be entitled to both Social Security checks?
— Senior

A. It doesn’t work that way.

Selecting how and when you take Social Security benefits can be one of the most important retirement decisions you make, so you need to make sure you do this correctly.

Let’s cover what seniors should consider before taking benefits.

The most important thing in retirement is not rates of return, but cash flow, said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton.

“If you have money coming in every month, no matter what from – Social Security, pensions and annuities – then your life is much better than someone whose focus is on rates of return and living off that,” Lynch said.

So when it comes to Social Security income, you should think big picture.

You can start taking the benefit at age 62, but then your benefit will be reduced by about a third versus if you take it at full retirement age (generally 66 or 67), Lynch said.

If you take it at age 70, it is about 25 to 30 percent higher than at full retirement age, he said.

“So if you take your benefit at age 70 versus age 62, your monthly benefit will be almost double,” he said. “Every year you wait past full retirement age, you get a 8 percent increase, indexed for inflation, and guaranteed for life.”

“If I could sell a product that had a guaranteed 8 percent return, indexed for inflation and guaranteed for life, it would be an extremely popular product,” Lynch said.

So when people are selecting their benefit, there are a few things to keep in mind.

Lynch said more likely than not, one of you will live longer than the other. So taking an early benefit, especially if your benefit was higher, has an extremely negative impact on the surviving spouse.

Generally, the break even point if you take your benefit at 62, 66 or 70 is age 78, he said. The average life expectancy for people who make it past 65 is in the mid-80s. This means the average person will benefit by taking Social Security later, he said.

“So to your original question, when one spouse dies, the surviving spouse gets the higher of the two benefits, not both benefits,” Lynch said.

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