Social Security Survivor Benefits Demystified – Finger Financial Five #199

Social Security Survivor Benefits Demystified

"For life and death are one, even as the river and the sea are one"

Many people do not understand how their filing decision for Social Security can affect their spouse. Also, many surviving spouses are not aware of the options they have and what is best to choose.  

The following is to an attempt to clarify any confusion… 

Social Security Survivor Benefits Demystified 

When making any financial decision, the goal should generally be to put the odds in our favor for the long run. The best way to do that is usually to plan in advance. If we are anticipatory, we can zoom out and see the full landscape before making a decision. If we are reactionary, we can fall into the trap of making a decision that seems right today but is not right in the long-run. 

One of the large decisions that we will face is when to file for Social Security. (It actually can be a series of decisions, especially for spouses.) We want to plan not only for ourselves today, but especially for our spouse for tomorrow.  

We must plan for various outcomes, and use the probabilities to inform our decisions. One potential outcome to prepare for is if one spouse were to pass away while the other spouse lives on for an extended period. This is where Social Security Survivor Benefits come into play.  

What Are Survivor Benefits? 

Survivor benefits are monthly payments you may qualify for based on your deceased spouse’s Social Security record. Even if you are both still alive, planning for this potential outcome in advance can result in a higher total lifetime benefit. 

Survivor benefits are very straightforward in this following scenario: 

The higher lifetime earning spouse is already receiving their benefit when they pass away AND the surviving spouse is over Full Retirement Age (FRA). In this instance, the surviving spouse should simply take the higher of the 2 benefits going forward. 

Survivor benefits become more complicated in this scenario: 

The surviving spouse is under Full Retirement Age (FRA) when their spouse passes away. Now they have 2 decisions: 1: When to file for their own benefit, AND 2: When to file for the survivor benefit. (We’ll discuss how to navigate that in a minute.) 

Who Qualifies? 

You may be eligible for survivor benefits if you are at least 60 years old (or 50-59 if disabled), AND you meet one of the following two criteria: 

  • Your spouse passed away during your marriage. 
  • You were divorced but married for at least 10 years before the divorce and your ex-spouse has passed away. 

 

How Much Can You Receive? 

The amount depends on your age when you start the benefit, and it depends on how long they delayed their own benefit: 

  • At age 60, you’ll receive about 71.5% of the deceased spouse’s full benefit. 
  • Waiting until your FRA gives you 100% of the deceased spouse’s benefit (Even if the deceased spouse delayed all the way to age 70, you inherit that full increased benefit which amounts to about 132% of their FRA benefit).  
  • Survivor benefits do not increase further after the surviving spouse’s FRA.  
  • If the deceased spouse filed early, then they permanently decreased your potential survivor benefit.

What If You Have Your Own Social Security? 

If you qualify for benefits based on your own work history, it may be best to take one benefit before switching to the other one later.  

It’s important to know which one to take first though because for one person, taking their own benefit first may make sense. For another person, taking the survivor benefit first may be best.  

It’s also important to navigate the timing correctly. Just because you CAN file for survivor benefits at age 60 doesn’t mean that is the best decision.  

What If You Remarry? 

You can still receive survivor benefits from your prior marriage if you remarry after age 60 (or 50 if disabled). If you remarry earlier than age 60, you may not be eligible for survivor benefits from that prior marriage unless the new marriage ends. 

 

How do I know I’m making the right choice? 

There are a lot of moving parts and potential ‘what if’s’ related to this topic. Sometimes, it’s best to pick up the phone and call someone who has more experience on this topic than yourself. Be careful relying on SSA as your guide here though. There have been instances where they guide people into a short-run decision when they should be thinking more about the long-run. The Social Security Administration will not be able to take into account all of your other assets and your financial position.  

You’ll want to look at a Social Security illustration that shows break-even ages for BOTH spouses and their surviving spouse benefits. The differences in lifetime benefits can be a $300,000 decision.  

If you have questions, feel free to reach out to us.  

Social Security Survivor Benefits Demystified

Our new YouTube video discusses: How to Increase Your Social Security Benefits in 4 Easy Steps. Let me know what you think.

If there is a topic you would like us to write about or do a video on, please let us know. 

On the lighter side….I was a chemistry minor at the College of Charleston. As I watched the kids sled on boogie boards and surfboards (without fins) during last week’s snowfall, I realized that the equipment works in two of the three phases of water.  

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