A special page for Widows and Widowers

Birth YearFRA606162*63 64656667686970
1939
or earlier
6571.50% 77.20%82.90%88.60%94.30% 100.00%
0.00%80.56%86.67% 93.33%100%105.5%111%116.5%122% 127.5%
1945 - 19566671.50%76.25% 81.00%85.75%90.50%95.25% 100.00%
0.00%75.42%80% 86.67%93.33%100%108%116%124% 132%
1962
and later
6771.50% 75.57%79.64%83.71%87.79%91.86% 95.93%100.00%
0.00%70.42%75% 80%86.67%93.33%100%108%116% 124%

As a survivor you have two choices on when to start the Social Security benefits that you will receive during retirement. Your survivor benefits max out at 100% of your deceased spouse’s Full Retirement Benefit level at your pesonal full retirement age (FRA) and you can start at 71.5% of those benefits as early as age 60. Your second option is to start your own benefits as early as age 62. Your own benefits will be 100% at your Full Retirement Age but will continue to grow until age 70.

One of the best advantages that a surviving spouse has is that they can actually start their Social Security benefits twice, once as a survivor and once as themselves. Lets look at a couple of examples.

You were born in 1961 and both you and your deceased spouse had similar $60,000 inflation adjusted incomes. You could start Survivor benefits in 2021 when you turn 60 at $18,182, 71.5% of your spouses $25,429 FRB. Continue that benefit level until 2031 when you turn 70 at which time you could start your own benefits at $31,532, 124% of your personal FRB.

You were born in 1961 and both you and your deceased spouse had similar $60,000 inflation adjusted incomes. You could start Survivor benefits in 2021 when you turn 60 at $18,336, 71.5% of your spouses $25,645 FRB. Continue that benefit level until 2031 when you turn 70 at which time you could start your own benefits at $31,800, 124% of your personal FRB.

The important thing to remember here is that you have to plan for your retirement twice! In this case, your early retirement would have a relatively small personal Tax Hump, and you would probably have to pay your way through it each year. But, this puts you back in the 22% Federal Tax Bracket and gives you a reasonable opportunity to do a series of Roth Conversions at reasonable tax rates, just be careful to avoid excessive “MAGI” taxable levels that could effect what you pay for Medicare! With proper planning, your “second retirement” with its much larger Tax Hump could be managed with smaller Required Minimum Distributions from a smaller Traditional IRA while having an additional Tax Free Roth IRA income source.

What if you were a “stay at home” spouse of a very successful, now deceased, business person? Their Average Income was $110,000 and yours was only $40,000. Assuming you were born before 1954, you could retire on $14,352, 75.42% of your personal $19,092 FRB, then, when you turn 66, your Full Retirement Age, switch to 100% of your spouse’s $33,739 Full Retirement Benefits, your Survivor Benefit for the rest of your life!

Your Retirement Sweet Spot

We are putting this section at the bottom of the Survivor page because surviving spouses have the best opportunity to start their own Social Security benefits at higher levels. For many surviving spouses, they will probably start their own maximum benefits at the age of 70.

SingleTax
Free
After 2018 Taxes Your Personal Tax Hump
SSBPre-HumpTax RateStartEndWidth
$20,000$33,600$52,4118.50% $56,865$58,706$1,841
$30,000$42,400$60,1147.41% $64,568$73,706$9,138
$35,000$46,569$63,9106.97% $68,364$81,205$12,841
$40,000$50,733$67,8166.57% $72,270$88,706$16,436
SingleTax
Free
After 2019 Taxes Your Personal Tax Hump
SSBPre-HumpTax RateStartEndWidth
$20,000$33,850$52,8768.59% $57,419$58,706$1,287
$30,000$42,567$60,5797.50% $65,122$73,706$8,584
$35,000$46,734$64,4307.05% $68,973$81,205$12,232
$40,000$50,900$68,2816.65% $72,824$88,706$15,882

In the Average Income chart above, the possibility of an age 70 $30,000 SSB starts at an inflation adjusted gross income level of less than $60,000 and at the $30,000 level a retired individual can have a Tax Free income of $42,400 up to a minimally taxed Pre-Hump after tax income of over $60,000, which was their gross income before retirement. In the table above, their overall tax rate on the first $64,568 of gross income will only be 7.41%. The marginal tax rate on their next $9,138 will be 40.7%.

In the Average Income chart above, the possibility of an age 70 $30,000 SSB starts at an inflation adjusted gross income level of less than $60,000 and at the $30,000 level a retired individual can have a Tax Free income of $42,567 up to a minimally taxed Pre-Hump after tax income of over $60,000, which was their gross income before retirement. In the table above, their overall tax rate on the first $65,122 of gross income will only be 7.5%. The marginal tax rate on their next $8,584 will be 40.7%.

Note: If you are changing the year and it looks like the width of your Tax Hump is getting smaller over time, the table uses constant benefits levels at even $1,000 increments. The actual COLA adjustment for 2018 to 2019 was 2.8%. If your benefit level was exactly $30,000 in 2018, it would be $840 larger in 2019 which would also increase the size of your Tax Hump. The actual changes in your Tax Hump are complex. There is no direct correlation between the annual increases in Tax Brackets and Social Security COLA.

The key to the “Sweet Spot” is to avoid the 40.7% and 49.95% marginal tax rates.

A large part of the definition of an individual “Sweet Spot” depends on your personal plans for your retirement. Do you want to live comfortably “at home” so that the grand children can visit as often as possible, or do you want to plan multiple cruises or overseas flights because you finally have the time to see the world?

Setting yourself up for your personal Sweet Spot will probably take some preliminary planning.

Before your retirement age

You might want to look into an Annuity or other investment strategy to provide yourself with a guaranteed source of income once you reach age 70. Check with your investment advisor AND you tax accountant to find out if this income source will be taxable or non-taxable income. You should also check with a legal advisor to find out if this income stream will be returned to you after you are released from a nursing home!

Before age 63

Even if you have already started your survivor Social Security benefits, you will probably want to do what could be a substantial IRA/401K to Roth Conversion to avoid the MRDs (Minimum Required Distributions) from those accounts after the age of 70. Without pre-planning, those MRDs could easily push you into your personal Tax Hump.

Your Medicare premiums will start when you reach age 65. Medicare will look at your tax return from two years prior to determine your MAGI, Modified Adjusted Gross Income, which will be then used to determine your personal Medicare premium cost. This is why you want to do the Roth Conversions in the years before you turn 63.

Before age 70

As time progresses, at least once a year, pre-calculate what all of your potential income streams will be when you reach age 70 and start your maximum Social Security benefits. The Annuities and other guaranteed income sources will probably have varying income potentials based on when they are started. Make sure that you start all of these income streams at the proper income levels so that your potential income at age 70, including MRDs, will place you below the Start of Your Personal Tax Hump.


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