By Alyson Dorosky, CSSCS
Many people carefully prepare for their eventual death-- buying life insurance, designating beneficiaries for retirement accounts, and even pre-planning their funerals. Social Security survivors benefits are another way to ensure the spouse who outlives you is financially secure.
I used to think that survivors benefits were straightforward. A call to Social Security, and it’s done, right? But as I’ve consulted on client cases with financial advisors, I’ve learned that the recently widowed are sometimes surprised by the rules.
Funeral homes will notify the Social Security Administration (SSA) of an individual’s death if survivors ask them to and provide the person’s Social Security number. If Social Security isn’t promptly notified and pays benefits for months after the month in which the person died, those benefits must be repaid.
If an individual was collecting Social Security benefits, a surviving spouse needs to contact SSA directly – by calling or visiting a Social Security office – to arrange for survivors benefits. This cannot be done online.
A widowed spouse who has reached survivor Full Retirement Age (FRA) is entitled to 100% of what a deceased spouse was collecting in Social Security benefits at the time of death. The survivors’ benefit will be less than 100% if the widowed spouse is between age 60 and Full Retirement Age.
Of course, many couples have two income earners. An eligible widowed spouse can take a survivors benefit and switch to their benefit later. This is a point in a helpful blog post published by Social Security, “Four Tips Widows Need to Know.”
Many are surprised to learn that there is no double-dipping in Social Security. A widowed person is not entitled to the deceased spouse’s and their own benefits. There are calculations and choices to be made.
Factors in Determining Survivors’ Benefits
Knowing some of the factors that affect Social Security survivors benefits can guide some of your decisions about when to begin collecting. Here are a few key ones:
- The age at which the deceased spouse started collecting Social Security: This affects a surviving spouse’s benefit and is why filing should be a mutual decision.
- Social Security credits accumulated by each spouse: If both spouses worked and earned enough retirement credits, each is eligible for benefits (although there are limits on how much a family can receive in benefits) while married.
- The widowed spouse's age and employment history upon a spouse's death. Widowed spouses who are working may have their survivors benefit reduced if they earn over limits set by SSA. On the other hand, their earnings will accrue credits toward their own retirement benefit.
Pleasant Surprises: An Example
A financial advisor’s clients, a husband and wife, filed for their retirement benefits as early as possible at 62 years old, each receiving reduced benefits.
The husband passed away at age 75; and his wife, age 73, filed for survivors benefits. It turned out that she was eligible for more than 100% of her husband’s benefit! Here’s why.
When both spouses file early, but a widowed spouse is past what Social Security defines as their “Survivor FRA,” the Social Security Administration (SSA) will pay the higher of the following benefits:
- 100% of the deceased spouse was receiving at the time, or
- 82.5% of the deceased spouse’s primary insurance amount (or what they would have received if they’d waited until full retirement age to collect benefits).
In this case, the widow received a bump in her monthly benefit from what her husband collected. If she wanted to return to work to help pay expenses, there wouldn’t be any limit on how much she could earn because she is over her Full Retirement Age. If she remarries, she can continue collecting her survivor benefit because she is over 60.
A surviving spouse who is working may have their Social Security benefits reduced if they earn over the limit set by the SSA. On the other hand, working could help widowed individuals accumulate more credits toward their retirement benefits.
Remember This …
There are more than 2,700 rules of Social Security. So, please, heed this advice:
- Before you make any filing decision, consult someone, such as a financial or tax advisor, who has software to model different scenarios for filing for Social Security.
- Include your spouse in decision-making about Social Security benefits. Too many act too fast, sometimes irrationally, eager to get the benefit they earned or worried they’ll die early and not get their fair share.
About the Author: Alyson Dorosky, CSSCS
Alyson Dorosky, CSSCS, is LifeYield Head of Social Security Support. She has seen thousands of different Social Security scenarios in five years of working with advisors and their clients to customize filing strategies and maximize retirement income.