How to Claim More Than One Social Security Benefit at a Time

There are numerous benefits that we may one day receive from Social Security depending on our circumstances. Benefits such as spousal, family, disability, and survivor, to name a few.

And under certain circumstances we may become eligible for more than one benefit at a time.

Unfortunately, many people fail to realize that they have earned this dual eligibility and forfeit benefits. Others might be aware of their dual eligibility status (or be told by the Social Security Administration), yet not know that there are options to elect to claim one or the other of the benefits that might be more advantageous over the long run. Under many circumstances there’s even a right to claim one benefit now and switch to another at a later date in order to lock in greater lifetime benefits.

Failure to fully understand our benefit options can cost hundreds of thousands of dollars in lost benefit payments.

Let’s take a look at an example of a trap that arises when we become eligible for more than one benefit at the same time. We’ll use work-based and survivor benefit eligibility to illustrate the importance of understanding the interplay between benefits.

Consider a married couple, Nancy and Frank. Nancy is 60 and eligible for a Full Retirement Age (FRA) monthly benefit of $2,000 when she reaches age 66. Frank’s FRA benefit is $1,700 and he has not started to collect any benefit yet; it doesn’t really matter what his age is in this instance.

Sadly, Frank passes away. Nancy learns that she is eligible for a survivor benefit that can begin immediately (because she is at least 60). It’s based on Frank’s projected FRA benefit of $1,700. It’s reduced to $1,216 a month because Nancy is claiming it early, before she reaches age 66. Still, it makes a huge difference for her financially having lost Frank’s income.

Here’s where it gets tricky.

Nancy is aware that when she turns 62 she becomes eligible to collect a Social Security benefit based on her own work record. So she has become dually eligible for benefits. Unsure what to do, she goes online at the Social Security Administration website to get information about this option.

She accesses her personal account information and learns that she can switch to her own benefit and begin collecting $1,500 a month; that’s $3,408 more a year than she currently gets and she decides to make the switch and signs up online.

What was not made clear in her online research was that in electing to switch to her own benefit now, Nancy will forego a larger benefit she could receive later on her own work record. In fact, if she chooses instead to continue to receive her survivor benefit for now, she can switch at a later age and eventually receive a monthly benefit of $2,640—76% more than if she starts claiming at age 62.

If she lives to her average life expectancy of 86, she will collect over $190,000 more in benefits this way.

For illustrative purposes, I’ve simplified this case. The best choice for Nancy could well be different depending on their relative benefit amounts, age difference, and whether Frank had started his benefit before he died, to name just a few considerations.

But the point is, this is a complicated decision and it’s important to understand the financial impact before committing to anything…in Nancy’s case, a $190,000 decision.

Image: © Keating

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