In poor health, most people believe that they should claim Social Security early, but this isn’t always true. Some people may prefer this option, but others may not.
At 62, you become eligible to claim Social Security benefits, but it’s worth noting that your full retirement age extends well beyond that. The general belief is that claiming Social Security earlier is logical if you are in poor health. By postponing the benefits, you receive larger monthly checks, although it takes time for these higher payments to compensate for the income you forego by not claiming immediately. If your life expectancy is limited, claiming early and obtaining as much money as possible right away might make sense.
Nevertheless, this advice has a crucial caveat, particularly if you are married. In the case of poor health, delaying Social Security benefits could be a more favorable option for your spouse. Here’s why:
Delaying benefits can alleviate the significant financial strain for your spouse. When you are married, your spouse becomes eligible for Social Security survivor benefits in the event of your passing. Your choices regarding your benefit claims directly impact these survivor benefits.
If you claim Social Security early, your spouse’s survivor benefits will be based on the reduced amount you were receiving. Since claiming Social Security before the full retirement age can decrease benefits by up to 30%, depending on your age when filing, your spouse may receive substantially reduced survivor benefits.
Conversely, if you delay claiming Social Security beyond full retirement age, your spouse’s survivor benefits will be based on the increased amount resulting from your delayed claim. By increasing your monthly benefit by 2/3 of 1% monthly or 8% annually until age 70, your spouse could receive a considerably larger sum.
Moreover, if you were to pass away before claiming Social Security altogether, your spouse’s benefits would be based on your primary insurance amount or standard benefit, a higher amount than they would have received if you had claimed early.
Considering your spouse’s well-being, delaying your benefits is advisable. While your spouse’s retirement benefits might exceed their survivor benefits, depending on their earnings, if you were the higher earner, their benefit could reach 100% of your standard benefit or the amount you received before your death. Unfortunately, claiming early would diminish their entitlement, leaving them with significantly less than they would otherwise receive. This could lead to severe financial hardship for your surviving spouse.
Losing a spouse is always challenging for the survivor’s finances, as the household goes from two Social Security checks to just one. You wouldn’t want to exacerbate this situation further.
Therefore, unless your spouse earned an equal or higher income than you did, it is highly recommended to seriously consider delaying Social Security as long as possible if you are in poor health. While you may sacrifice some income during your lifetime, the ability to provide for your partner might outweigh the temporary financial setback.