Social Security is the primary retirement income source for many Americans – for over 60% of them it provides more than half of their retirement income. Security discussions often focus on retirement security, but a number of related benefits also deserve the spotlight, such as survivor benefits for a surviving spouse.
Survivor benefits play a crucial role in retirement security and providing for families that unexpectedly lost a loved one. The rules can be complex, and in some cases require planning in the context of a surviving spouse’s overall retirement, tax and financial planning needs.
There are roughly four different categories of Social Security survivor benefits.
- Benefits at age 60: Benefits can start as early as age 60 to anyone married at least nine months.
- Lump sum payment: a one-time death benefit payment of $255 paid at any age. This amount seems pretty trivial, especially since it hasn’t been updated for inflation. It used to be positioned as a way to help with funeral costs.
- Disabled benefit: If you’re disabled, you can collect a Social Security survivor benefit as early as age 50.
- Surviving child benefit: If you’re caring for a child under the age of 16, you can collect benefits at any age.
Let’s dive a little deeper into these Social Security benefits for surviving spouses.
1. Survivor Benefits At Age 60
At their full retirement age, the surviving spouse can receive full survivor benefits based on the deceased individual’s retirement benefit. The surviving spouse can claim benefits as early as age 60, but they’ll be reduced for early claiming.
The amount received from survivor benefits is based on the earnings of the person who passed away. At full retirement age, the survivor receives 100% of the deceased individual’s benefit they were receiving or their projected benefit at full retirement age. If someone collects benefits before full retirement age, they’ll get between 70-99% of the worker’s basic benefit amount.
You can only receive your benefit or the survivor benefit, though, not both. Let’s say you are 70 years old, and your spouse is 72. Your spouse received $2,000 a month, and you received $1,000 a month. If your spouse passes away, you’re eligible for their $2,000-a-month benefit. You won’t be able to keep both benefits, so your $1,000-a-month benefit will go away. You want to keep the highest of the two benefits. In most cases, when one spouse passes away, a decent amount of Social Security income will be lost.
In many cases it can make sense to defer the larger of the two benefits for as long as possible. This allows the larger benefit to grow and be paid for the longer of the two spouses’ lives. We call this strategy maximizing the surviving benefit.
Collecting survivor benefits at age 60 doesn’t directly impact your own Social Security retirement benefit. In fact, you can collect survivor benefits at age 60 and leave your own benefit until age 70. This allows you to receive much needed income from Social Security at age 60, but still allows your own retirement benefit to grow until age 70. If at that time that benefit is larger than the survivor benefit, you can switch over to the higher benefit.
The Social Security Administration lays out the information you will need to collect survivor benefits. You can apply for survivor benefits by phone or in any Social Security office. The information you’ll need is:
- Proof of death either from a funeral home or death certificate
- Your Social Security number and the deceased worker’s SSN
- Your birth certificate
- Your marriage certificate, if you’re a widow or widower
- Your divorce papers, if you’re applying as a divorced widow or widower
- Dependent children’s Social Security numbers, if available, and birth certificates
- Deceased worker’s W-2 forms or federal self-employment tax return for the most recent year
- The name of your bank and your account number so your benefits can be deposited directly into your account.
If you’re still working and try to collect benefits between age 60 and full retirement age, the benefits may be subject to something called the earnings test. If you exceed an annual earnings limit, your benefits will be suspended. After you reach full retirement age, the earnings test no longer applies. Additionally, any benefits that were suspended under the earnings test are recalculated once you reach full retirement age.
2. Lump Sum Payment
The $255 one-time payment was originally intended to help survivors after the loss of a spouse with certain funeral and end-of-life costs. However, the amount is not indexed for inflation and doesn’t significantly move the needle for most surviving spouses. The one-time payment can only be paid to a surviving spouse or a child if they meet certain requirements. To get the one-time payment you need to apply for it within the first two years of the deceased individual’s date of death.
3. Disabled Benefit
If you’re disabled, you can receive survivor benefits as early as age 50. For divorced spouse’s, you can also receive survivor benefits if the marriage lasted for at least 10 years. Again, you would be able to start collecting survivor benefits at age 60, or age 50 if disabled. If you remarry, you can no longer receive survivor benefits. However, if you remarry after age 60, or after age 50 if disabled, you can continue to receive survivor benefits based on a deceased spouse if you were married for at least 10 years. Interestingly, you can even switch over to a spousal benefit based on the new spouse’s work history at age 62 if the new benefit would be higher.
4. Caring For Children Younger Than 16
A surviving spouse of any age caring for a child who’s younger than 16 is entitled to 75% of the worker’s benefit amount. Additionally, the child is also eligible for a survivor benefit of 75% of the deceased worker’s benefit amount. Divorced spouses taking care of the deceased ex-spouse’s child who is younger than 16 are also entitled to 75% of the deceased spouse’s benefit amount. Furthermore, the ex-spouse need not meet the 10-year marriage rule and they can be any age to collect benefits. The child of the decease spouse and the ex-spouse must be either naturally born or legally adopted.
Social Security survivor benefits are crucial for retirees and for those who lose a wage-earner early. However, there’s often a lot of complexity and planning that’s needed when it comes to collecting and coordinating survivor benefits with an overall financial plan. While Social Security’s website is a great resource for the rules surrounding benefits, the Social Security Administration offices aren’t designed to provide a lot of guidance around collecting benefits in the most efficient manner for your particular situation. Because there are thousands of Social Security rules and many claiming decisions are permanent, it’s beneficial to speak with a qualified financial advisor before claiming benefits. That will help you maximize your decision and your financial security.