Cincinnati, Ohio Estate Planning

Widows Be Wise About Social Security

“Losing one's spouse is one of life's most difficult and overwhelming experiences. Claiming Social Security survivor benefits apparently ranks as a close second, based on a frantic phone call I received from a close friend this week.”

A friend who was unexpectedly widowed, when her husband died at age 44 of a massive heart attack, was left with a toddler, a teenager, too little life insurance and household income that had been cut in half. She managed, as reported in Investment News’ article “Inaccurate info from Social Security Administration a challenge for widows,” in part thanks to Social Security.

Now that she is planning her retirement, she’s struggling to get to the heart of her benefits as a surviving spouse. She’s not the only one facing this issue.

Her financial advisor recommended that she claim her survivor Social Security benefits when she retires next January and then switch to her own benefits at age 70, when the amount has maxed out.

Three separate calls to Social Security Administration representatives resulted in three incorrect answers. They told her that she was not entitled to survivor benefits, because her own retirement benefits were larger. Each reported that there were new “deemed filing” rules that require anyone born after Jan. 1, 1954, to file for all available benefits at the time of the claim. They also said that people who are born after that date are no longer allowed to claim one type of benefit first and then switch to another.

This misconception was based on an old file and switch method that was changed and is no longer available. However, the change does not apply to survivor benefits. The agents did not know the difference.

Earlier this year, an internal Social Security Administration report found that agents and representatives gave widows and widowers incorrect advice 85% of the time, based on random samples of claims by surviving spouses, who were also entitled to claim their own retirement benefits.

Social Security had been a blessing for the widow, as she received dependent benefits for two children as she struggled as a single parent. When the kinks were worked out, she was pleasantly surprised to learn that her survivor benefit was much larger than anticipated, given the short span of her late husband’s working years.

However, this incident and the statistics from the study should serve as a warning to those about to navigate their own journey for Social Security survivor benefits. Don’t be afraid to ask questions, call more than one time and visit the Social Security website to get information on your benefits.

Your Cincinnati elder law planning attorney will also be able to help, since he keeps tabs on changes in the law and various government institutions that impact seniors.

Remember: “An ounce of prevention is worth a pound of cure.” When making your estate plan or when probating an estate or administering a trust, do not go it alone. Be sure to engage a Cincinnati estate planning attorney. 

For more information about estate planning, probate or trust administration in Cincinnati (and throughout the rest of Southwest Ohio) and to review free resources regarding estate planning, probate or trust administration, visit my website. If you have questions regarding this article or a particular legal matter, feel free to contact me at 513-399-PLAN (7526).

Reference: Investment News (Sep. 12, 2018) “Inaccurate info from Social Security Administration a challenge for widows”

Cincinnati - Social Security Advice for Women Worrisome

It’s no secret that women live longer than men. But a new study by the Wharton School’s Pension Research Council suggests that some professional financial advisers neglect to take that fact into account when they tell clients how to time their Social Security benefits. The mistake could cost women who outlive their husbands—and who might benefit from a significant monthly check into their 80s or 90s.

Planning for your estate, while planning for longevity, can mean making some specific choices and compromises. This fact of life is never truer for married couples, especially when one spouse outlives the other. In this context, Social Security is little understood and the consequences can be disastrous for residents in Cincinnati as well as other parts of the country.

The title of a recent article in MarketWatch says it all - “Widows getting cheated out of Social Security.”

The longevity calculus is oftentimes missing as it concerns women who rely on Social Security. Especially amongst earlier generations, wives may be more reliant upon their spouse’s Social Security and, therefore, on their spouse’s work history. This is almost a given if the wife was a homemaker.

If the married couple begins taking Social Security early, then it may adversely affect the spouse who did not work outside the home (or worked for a short duration, usually at reduced compensation), but who will survive longer. Even aside from Social Security, this disparity between the sexes is not something that should escape a prudent financial planner’s attention. Unfortunately, this is an easy fact to forget.

In addition to the MarketWatch article, a recent Forbes article titled “Sudden Loss: Financial Advice For Widows” provides some practical pointers to widows and those who advise them.

If you have any questions about any of the information contained in this blog, see my estate planning website or contact Cincinnati attorney David H. Lefton at 513-399-PLAN (7526) or by email at dhl@bpbslaw.com.

Reference:

MarketWatch (August 24, 2012) “Widows getting cheated out of Social Security”