Social Security - Survivor (Widow and Widower) Benefits
Whenever I mention social security survivor benefits, many people assume I’m referring to the one-time lump sum death benefit of $255 to a surviving spouse. 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 benefits 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:
- A widow or widower must have been married to the deceased worker at the time of his or her death — and for at least nine months before that (exceptions for accidental death and death in line of duty).
- Must be at least 60 years old.
Survivor Benefits are based on either what the deceased spouse was receiving or what he or she was entitled to receive. For example: Spouse A, who is 66 years old, and receiving $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 own retirement benefit, or the survivor benefit of $2,000 per month. But assume that Spouse A dies at age 70 and had suspended his or her benefits at age 66 to take advantage of delayed retirement credits of 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 1.32%). Unless Spouse B’s own retirement is larger than $2,640, he or she is eligible to receive the higher survivor benefit.
On the other hand, taking survivor benefits early, just as the case with retirement or spousal benefits, may not always be the best 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, he or she 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 full retirement age at that time. It will be less if she claims survivor benefits before her full retirement age (see chart below).
Claiming Age Percentage of Survivor Benefits
Age Percent
60 71.50%
61 76.25%
62 81.0%
63 85.75%
64 90.50%
65 95.25%
66 100.00%
The benefit is greatest for a married couple if the spouse who is the higher wage earner delays his or her benefit until the age of 70 to take advantage of delayed retirement credits. Not only will his or her income benefit be 32% higher, but the increased monthly survivor benefit to the surviving spouse can be significant.
At Carr Wealth Management, LLC, we specialize in identifying the optimal claiming strategy tailored to each client’s needs.
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