Although widowhood in developed countries is nowhere near the deplorable conditions experienced by widows in developing countries, the standard of living for widows continues to leave them vulnerable to economic forces.  Regardless of country of origin, poverty rates rise with the duration of widowhood.^[5]  In the United States, the poverty rate for elderly widows has persistently been three to four times higher than for their married counterparts.  The last 20 years have brought many changes to the work force; however, the husband remains the primary breadwinner making those women, who worked outside the home either very little or not at all, dependent upon their spouse’s lifetime earnings record.

One study found that widows experienced a 40 percent decline in Social Security benefits, a 60 percent decline in pension benefits and a 16 percent decline in bequeathable wealth while only experiencing a 20 percent reduction in costs.^[6]  As a result, those whose incomes may have been just over the poverty line prior to their spouse’s death may fall below it.

While it may seem morbid, husbands and wives should prepare for the wife’s eventual widowhood to help avoid future financial calamities.  One way to do this is to delay taking Social Security until at least full retirement age (FRA).  According to the Social Security Administration, 70 percent of Social Security beneficiaries apply for benefits before they reach their FRA.  Widows bear the brunt of the resulting loss of income when husbands claim their Social Security benefits early.^[7]  On the whole, Social Security benefits drop by one-third when one spouse dies (they can fall by as much as 50 percent but a decline of one-third is typical)^[8].  But those benefits play such an important role in the finances of the surviving spouse that for 46 percent of non-married beneficiaries, Social Security made up 90 percent or more of their income.^[9]  Today, although the old-age poverty rate is less than one-third of what it was in the middle of the 20^th Century, widowhood remains a vulnerable risk factor for transitioning into poverty.^[10]  A 1939 amendment to the Social Security Act gave benefits to widows (65 and older) of retired and deceased workers but it wasn’t until the mid-60s and early 70s that survivor benefits were made available to survivors of either sex at age 60.

Let’s look at how an early claiming impacts the Social Security benefits of a married couple.

David Jeffrey’s is 62.  His wife Susan is also 62.  Susan has never worked outside of the home.  David and Susan’s FRA is 66.  If David starts collecting benefits at age 62, he’ll receive only 75% of his full payment of $2,225 or $1668.75.  If Susan waits until she’s 66, she’ll receive half of David’s benefit or $834.38 per month (if she opts to start at 62, she’ll only receive 35% of his payment).  If, on the other hand, David had waited until his FRA, David would receive $2,225 a month and Susan at half David’s benefit would receive $1112.50 a month.  Those are their permanent benefits.  Now suppose that David had waited until age 70 before claiming.  If David had delayed claiming, his payment would include a permanent raise.  Instead of claiming $2,225 a month, David would receive $2,937 a month.  Susan’s benefits will therefore be $1468.50 (note: Susan will never make more than half of David’s benefits under the Spousal benefits since she has no work record of her own.)

Now suppose that David started collecting Social Security at age 62 but at age 66, David dies.

When David opted to begin collecting Social Security at age 62, he was in effect opting to reduce Susan’s widow payment.  Susan will receive a payment reduced to 82.5 percent or whichever is greater (in this case, Susan will receive 82.5 percent).  Her widow’s benefit will therefore be $1835.63.  (Note:  This looks like a raise since Susan would have been collecting only $834.38 if David were still alive however; Susan’s income has actually decreased from a couple’s benefit of $2503.13 to a widow’s benefit of $1835.63, a reduction of $667.50 or a slightly more than 25 percent reduction in household income from Social Security.)  If instead, David had waited until FRA or had died before ever receiving Social Security benefits, Susan would have received $2,225 a month (100% of the full payment amount).  Say that David made it to age 70 before he died AND he hadn’t begun collecting yet, Susan would be eligible for $2,937 per month.  Survivors who receive their benefits no earlier than their FRA, will receive a benefit no greater than whatever the benefit would have been or was paid to the deceased worker.^[11] 

According to the Social Security Administration, “women in households that are least prepared financially for widowhood are at the greatest risk of a husband’s death because of a strong relationship between mortality and wealth.”^[12]  Advanced age often does not allow for widows to financially adjust by traditional methods such as returning to work or by cutting costs.  However, existing Social Security provisions provide options to substantially improve the economic well-being of claimants through delayed claiming.  Delaying claiming of Social Security benefits past early eligibility dates significantly boosts retirement benefits and security for widows.  Ignoring those options and making a decision to collect early benefits has long term implications for the surviving spouse and jeopardizes that spouse’s future financial health even in the case of women who have some accumulated wealth.