Decoding Delayed Retirement Credits and Filing Flexibility for the Surviving Spouse

It's a question every planner hears: "I plan to wait until 70 to maximize my Social Security, but what happens if I die at 69? Will my spouse lose all those benefits?" This scenario highlights one of the inherent risks of delaying Social Security, but the rules offer more protection and flexibility than most people realize.

The Key Risk of Delaying Social Security

The primary risk of delaying your Social Security past your Full Retirement Age (FRA) is that the longer you wait, the fewer years you have to collect those benefits, especially if you pass away sooner than expected. However, the system does protect the benefits you've earned up until the final day.

Fact 1: Delayed Credits Are Protected

If you die before filing (e.g., die at age 69 when your FRA was 67), your spouse will be eligible for your Delayed Retirement Credits (DRCs) that were accumulated up to the date of your death. That means the higher benefit amount you built up from age 67 to age 69 is "baked into" the survivor benefit they will ultimately claim.

Fact 2: When Does the Survivor Benefit Stop Growing?

Once you die, the benefit amount your spouse is eligible for as a survivor locks in based on your record at that time.

• The surviving spouse cannot wait until you would have been 70 to maximize the benefit. The benefit stops earning DRCs the moment you pass away.

• The survivor benefit the spouse claims will be reduced if they file before their own Full Retirement Age (FRA), similar to how filing for regular benefits early works.

The Survivor's Strategic Choice: Exploiting Flexibility

One of the most important rules to remember is that survivor benefits are excluded from the "deemed filing" rule. This exception provides vital flexibility for the surviving spouse:

• The Strategy: The surviving spouse can potentially file for their own reduced retirement benefit early (or start receiving it) and then, at their own Full Retirement Age (FRA), switch to the higher survivor benefit on the deceased spouse's record.

This means a survivor can strategically choose to receive one benefit now while preserving the option to switch to the maximum survivor benefit later, maximizing their total lifetime income.

Conclusion: Don't Let Fear Drive Your Decision

The death of a spouse while delaying benefits is a real risk, but the Social Security Administration has rules in place to ensure the surviving spouse benefits from those accumulated credits. The existence of the DRCs and the filing flexibility mean that while you run a risk, it's not a total loss.

Most people go to extremes on this question—either claiming immediately or delaying fully. Understanding the flexibility available to the survivor allows couples to make a more balanced decision that reflects both their longevity risk and their desire for guaranteed income.

At Barrett FP LLC, we offer expert financial planning on an hourly basis, focused entirely on helping you achieve your goals.

Learn more about how we can help you structure your Social Security strategy and see if we're a good fit.