Research Looks to See How Hidden Costs of Social Security Claiming Takes Toll on Widows

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The timing of filing for Social Security benefits is one of the most important decisions senior Americans must make. But few think about the implications filing early or late in life has on widowed spouses, a segment of society that represents nearly 12 million women, according U.S. Census data.

Sita Slavov: 'I would hope that this study can help inform families, financial advisors, and policymakers about this important aspect of retirement security.' Photo by Ron Aira/Creative Services

Some two million of those widows live below the poverty line.

In a new and detailed study of the topic, Sita Nataraj Slavov, a professor of public policy at the Schar School of Policy and Governmentat George Mason University, is diving into a critical issue facing America's aging population: How Social Security claiming decisions affect the financial security of widows.

It's important to know that the later in life an individual files for Social Security-between 62 and 70-the larger the monthly benefit. Prior research, she said, has shown that many, if not most, people can increase the lifetime value of their benefits by delaying claiming.

Her new research focuses on the choices made by primary earners as to when to claim Social Security benefits and how these decisions shape the financial landscape for their surviving spouses in later life. A key component of her analysis is to assess how the timing of a deceased spouse's Social Security claim influences these financial outcomes after widowhood.

"If the primary earner passes away first, the secondary earner receives a survivor benefit that's equal to the primary earner's benefit, including the gains from delay," she said. "In other words, by delaying, primary earners can pass on a higher survivor benefit to their widowed spouses. So, the original claiming age of the primary earner in a marriage has major implications for the well-being of the secondary earner, if the secondary earner is widowed."

Using advanced econometric techniques, Slavov is employing difference-in-differences and event study models to trace the shifts in income, labor participation, wealth, and poverty risk that widowed secondary earners experience. She plans to examine how these shifts may be larger or smaller depending on the deceased spouse's claiming age.

"Social Security is the largest source of retirement income for most Americans," she said. "Among those aged 65 and over, widowed women have a higher poverty rate than others. The poverty rate in this group is around 16 percent, compared to around 10 percent for all individuals 65 and older."

Many of these widows, she said, "are secondary earners who are receiving survivor benefits. I would hope that this study can help inform families, financial advisors, and policymakers about this important aspect of retirement security."