Is My Daughter Making a Bad Decision? - Claiming Widow's Benefits Early

Dear Worried Mom: Your daughter is likely correct. There are two factors which come into play in your daughter’s circumstance – one is the Annual Earnings Test (for those collecting early SS benefits), and the other relates to Federal income tax on SS benefits received.  I’ll try to clarify both of these for you:

If your daughter claims her widow’s benefit at age 62, her benefit will be significantly reduced (by approximately 20+%) from what she would get at her SS full retirement age, and that would be a permanent reduction.  And, if she works (which you imply she does) she would also be subject to Social Security’s Annual Earnings Test (AET) which limits how much she can earn by working prior to reaching her SS full retirement age (her “FRA,” which is age 67).  The earnings limit for 2026 is $24,480 (changes yearly) and, if her annual 2026 earnings exceed that amount, Social Security will take away $1 of benefits for every $2 she is over the annual limit.  For example, if she is $25,000 over the limit, SS would take way benefits equal to $12,500. That would mean she wouldn’t get any SS benefits for the remainder of this year and likely some of next year also. And, if her earnings are significantly more than the annual limit, she may even be temporarily ineligible to receive a widow’s benefit (until she either reaches her FRA or earns less money).  FYI, the Annual Earnings Test will go away when your daughter reaches age 67 but, until then, the AET will likely restrict her ability to receive Social Security benefits if she continues to work full time.

The next factor to be aware of is the so-called “One Big Beautiful Bill” (OBBB) which the President claimed means “no tax on Social Security.”  This is an entirely different factor than the Annual Earnings Test (AET) described above. The above AET discussion dealt with SS earnings limits while taking benefits before FRA, whereas the OBBB deals with income tax on Social Security benefits actually received. The OBBB (enacted last year) provides an extra $6,000 deduction per person (on the tax return filed with the IRS) for those 65 years of age or older. That extra IRS deduction is designed to offset (either totally or partially) any income tax which is levied on Social Security benefits received by those age 65 or older. It’s also important to know that the OBBB only provides temporary income tax relief, because the law expires after the 2028 income tax year.

All of which leads me to conclude that your daughter’s decision to wait longer to claim her widow’s benefit from her deceased ex-husband is a prudent choice. As long as she is working and earning more than the annual earnings limit before age 67, the AET will restrict how much Social Security she is able to receive. If she later stops working or goes to part-time employment, she can revisit her decision at that time.  And, depending on her own personally earned Social Security benefit amount at age 67 (vs. her widow’s benefit), she can assess whether to claim her personal SS retirement benefit or to, instead, claim her benefit as her ex-husband’s widow if that amount is larger than her own SS retirement. And, unless Congress later extends the OBBB prior to 2029, she will, at that time, likely need to pay income tax on the Social Security benefits she receives.

This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website or email us at ssadvisor@amacfoundation.org. Because we are a non-profit organization, all services are free.