Social Security and Survivor (Widow and Widower) Benefits
Whenever I mention social security survivor benefits, many assume I'm referring to a surviving spouse's one-time lump sum death benefit of $255. Although the lump sum payment is available to surviving spouses, the survivor benefits I'm alluding to are the monthly benefits that may be available to a surviving spouse and dependents of a deceased parent. The rules regarding survivor benefits provide widows and widowers greater flexibility than other Social Security beneficiaries because retirement and survivor benefits represent different pools of money. A surviving spouse can choose one benefit first and switch to another benefit later if it results in a larger monthly amount. To be eligible to receive a Social Security survivor's benefit:
- Monthly survivor benefits are available to certain family members, including:
- A widow(er) age 60 or older (age 50 or older if they are disabled)
- A widow(er) of any age who has not remarried and is caring for the deceased's child (or children) under age 16 or disabled
- An unmarried child of the deceased who is younger than age 18 (or up to age 19 if a full-time student in an elementary or secondary school), or 18 or older with a disability that began before age 22
- A stepchild, grandchild, step-grandchild, or adopted child, under certain circumstances
- Parents, age 62 or older, who were dependent on the deceased for at least half of their income and whose own Social Security benefit would not be larger than that of the deceased offspring
· * A surviving divorced spouse, if they meet other eligibility requirements
Survivor Benefits are based on either what the deceased spouse was receiving, or what they were entitle to receive at the time of death.
For example, Spouse A, who is 66 years old, and receives $2,000 per month, suddenly dies. Spouse B, the widow or widower, who is also 66 years old, is entitled to receive the larger of her retirement benefit or the survivor benefit of $2,000 per month. But assume that Spouse A dies at age 70 and suspends their benefits at age 66 to take advantage of delayed retirement credits of an 8% increase each year until age 70 (8% X 4 years = 32%). Under these circumstances, the monthly survivor benefit to Spouse B would be $2,640 ($2,000 PIA X 1.24%). Unless Spouse B's retirement benefit exceeds $2,480, they can receive the higher survivor benefit.
On the other hand, taking survivor benefits early, just as with retirement or spousal benefits, will result in a reduction in benefits due to an early filing penalty and a possible reduction in benefits if you continue to work to your full retirement age. maybe a challenging decision. A worker's decision to collect early reduced retirement benefits will result in a reduced survivor benefit for the surviving spouse. If the surviving spouse has reached full retirement age or older, they will receive the larger of what the deceased worker collected or 82.5% of the worker's full retirement age benefit. So if a worker's full-retirement-age benefit is $2,000 per month and he collects early at 62, he receives just $1,500 per month — a 25% reduction for collecting benefits four years early. If he later dies, the maximum benefit his widow could collect is $1,650 — 82.5% of her husband's full benefit if she is at least her full retirement age. It will be less if she claims survivor benefits before her full retirement age (see chart below).