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By Suzanne Blake
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A woman has been warning others after her Social Security decision caused some of her benefits to disappear.
Lina Lambert planned her retirement with the belief her husband would still be around, and she could maximize on their mutual benefits.
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However, she was floored after realizing that not filing for benefits early had a negative impact on her overall retirement funding.
Lambert, a retired real estate agent living in California, said she and her husband considered whether she should file for Social Security at 62, but both decided it was better to wait until they were older to maximize on their benefits.
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"My husband was 3 1/2 years older, so he chose not to at 62 and we just kept working," Lambert told GoBankingRates. "Then I turned 62 and we just kept working, always thinking we would be able to collect our Social Security later on together, and then we could pull both of our Social Security together and have a fairly good income."
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This is the conventional wisdom that many financial planners will tell you: Wait now and you'll get higher benefits later. That's because Social Security maximizes benefits for those age 70 who have paid the most into the program based on their earnings.
"Unfortunately, most of the financial advice available today to seniors on when to start taking out Social Security benefits revolves around the maximum amount they can attain, not on one's smartest based on the needs of the individual," Alex Beene, financial literacy instructor at the University of Tennessee at Martin, told Newsweek.
"Everyone has a different scenario. Some may lose a spouse and need that income coming in quicker than waiting to draw a higher amount, while others can make it until the maximum age for starting the process."
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Lambert's husband started receiving Social Security at 66 while still working, as Lambert opted to wait. This was because she'd only receive $900 monthly if she filed at 62 compared to $1,700 at age 66.
"So when we looked at it for me to turn 62, we thought, well, 'You're only going to get $900 a month.' That just seems like peanuts. 'Let's wait until you're 66 to get the full $1,700.' Never realizing I would lose it," Lambert said.
But three years later, Lambert's husband died, and her retirement plans were shattered.
The loss in benefits occurred due to specific Social Security rules that outline surviving spouses get their spouse's benefits as long as they're 66 or older. Those under full retirement age but 60 and older can get between 71 percent and 99 percent of that amount.
Lambert was 65 when her husband died, and she was then forced to choose between taking her own Social Security benefit, which had accumulated to $1,200 monthly, or wait until age 66, when the check courtesy of her husband's Social Security benefits would be $2,500.
"If I would've taken Social Security at 62, we would've had a nice income with the two of us, and I would've been collecting for those three years that he lived," Lambert said.
Looking back, Lambert said, she could have used the money to invest or add to her current retirement accounts. But instead, she was forced to choose between the highest benefit amount, and the rest of the money disappeared.
"The rest just disappears into the abyss and nobody ever collects," Lambert said.
That's a potential risk that nearly all Americans will face when they become retirement age. Do they opt to take lower benefits now or wait until later, when they or their spouse might have died and lost benefits in the process?
"You hope it never happens, but should it happen in the unlikely event that one of you dies, at least you have collected some money," Lambert said.
Now Lambert recommends others consider the different possibilities instead of just taking the benefit amount on its surface level.
"If you make the wrong decision, it could affect you permanently," Lambert said.
Beene echoed this advice, emphasizing the need to speak with a financial planner before making your final decision.
"You need to speak with a financial planner, as well as other seniors in your community or online who have been through the tough decision before of when to do it," Beene said. "Not only can they share successes and mistakes, but they can give you a more rounded view of Social Security than just the bottom line."
Drew Powers, founder of Illinois-based Powers Financial Group, said there is no right answer for everyone when it comes to Social Security benefits.
"Taking benefits early will cost you dearly if you live a long life," Powers told Newsweek. "Waiting to take benefits will cost you if you or a loved one passes too soon."
"It is not greedy to take benefits early," he added. "But it's not something that can be decided on a whim. It requires personal analysis and pre-planning."
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