In my many years of working with my clients, there is nothing more heartbreaking than seeing them lose loved ones — especially a spouse.
All circumstances are different, but the one similarity is how confused and overwhelmed they seem when trying to manage their finances going forward. This is especially true when the spouse that passed away handled the finances on a day-to-day basis.
The Social Security Administration steps in and tries to help with this confusion and grief by providing income to the families of spouses whom were eligible for Social Security benefits. These are called survivors benefits or widow or widower benefits.
A widow (female) or widower (male) can start receiving reduced benefits as early as age 60 or full benefits at full retirement age for those who lost their spouse. Benefits can start as early as age 50 if you are disabled.
Who is Eligible to Receive Benefits?1
Your widow or widower may be able to get full benefits at full retirement age for survivors. Full retirement age (FRA) for survivors is age 66 for people born in any year from 1945 through 1956. The age gradually increases to age 67 for people who were born in 1962 or later.
Your widow or widower may be eligible for benefits at any age if they take care of your child younger than age 16, or if they are disabled and the child is receiving Social Security benefits.
Your unmarried children may be eligible for benefits if they are younger than age 18 or up to age 19 if they’re attending high school full-time. Your children can get benefits at any age if they were disabled before age 22 and remain disabled.
Your dependent parents can get benefits if they’re age 62 or older. For your parents to qualify as dependents, you would have to provide at least half of their support.
Retirement Portion of Survivors Benefits
I’ll turn to focusing on the retirement portion of survivors benefits for the remainder of the article.
Many of you are probably not aware that there are two sets of full retirement ages. In fact, many financial planners are not aware — I did not know until I was doing research on this topic some time ago. The full retirement age for survivors benefits can be up to four months earlier than for retirement and spousal benefits that I outline in my other article.
The spouse is entitled to the larger of the benefits based on their earnings record or survivors benefits based on the husband or wife’s record.
For example, we have a husband and a wife both born the same year, the husband filed for his benefit at his full retirement age of 66, and his primary insurance amount is $2,000 per month. His wife has a primary insurance amount of $1,500 and filed for her benefits at her full retirement age of 66 as well. The husband passes away at age 68, and the wife now has the option to choose between her benefit and her husband’s survivors benefit of his primary insurance of $2,000.
Please note, however, she does not get both benefits — she would receive the higher benefit only.
Look at the same scenario and let’s assume the husband still passes away at age 68, but in this example, he did not start taking his benefits at full retirement age 66. Instead, he was delaying his benefits and taking advantage of his delayed retirement credits of approximately 8% per year to age 70. The wife would receive his delayed retirement credit amount of $2,320 per month rather than his primary insurance amount of $2,000 per month if he started taking benefits at his full retirement age of 66. For more information on delaying credits, read my other article, The Basics: Full Retirement Age and Social Security.
The wife’s survivors benefits reflect any delayed retirement credits at the time of the husband’s death. It is important to realize, however, that they do not continue to accrue — she will get the benefit he was receiving or was eligible to receive based on his date of death.
The wife has a choice to make. She could choose to delay her retirement benefits and accumulate credits to age 70. If her full retirement age is 66 and she delays her benefits until age 70 her credits would be approximately 32% higher, benefits accrue at approximately 8% per year until age 70. What this looks like in practicality, is the wife starts receiving her survivors benefit based on the husband’s benefits and then she would be able to switch to her retirement credits if they are higher than her survivors benefits at age 70, for example. For more on this strategy please refer to the first case study below.
Am I able to claim my survivors benefit early, or do I have to wait for my full retirement age for survivors?
The surviving spouse can start benefits as early as age 60 and you can switch to your own retirement benefits as early as age 62. Why would you do that? Great question. I promise we will address this in our case studies.
The catch is, if you start benefits as early as age 60 you will only receive 71.5% of the survivor’s primary insurance amount benefits. If you wait until full retirement age you will receive the full benefit for survivors based on their primary insurance amount. If the primary insurance of your spouse at their death was $1,000 per month, you would only be entitled to $715 per month.
For example, if you’re the survivor and were born in any year from 1945 through 1956, your full retirement age for survivors is 66. Here are examples of what your benefit would be reduced to per SSA.gov:
- If you start receiving benefits at age 60, you will get 71.5% of the monthly benefit.
- If you start receiving benefits at age 62, you will get 81% of the monthly benefit.
- If you start receiving benefits at age 65, you will get 95.3% of the monthly benefit.
To review information for your specific age please visit the SSA.gov website and click on the “year of birth” link.
What if my deceased spouse claimed their benefit early before their full retirement age?
This is when things really start to get fun — I mean complicated. Don’t worry, that is why you made the smartest decision of your life and found my blog (joking). ☺
If your spouse started taking their benefits before their full retirement age, there’s an important distinction we need to make: are you filing for your spousal benefit before your full retirement age for survivors, or when you reach your full retirement age?
If you are filing at or after your full retirement age, it is much less complex than if you file before your full retirement age for survivors. In this instance, you are entitled to your deceased spouse’s monthly benefit amount or 82.5% of the primary insurance amount.
I thought you said this was simpler?
I did. Imagine how much more complex filing early is!
For example, let’s say you begin benefits at your full retirement age for survivors and your spouse claimed their benefits early at age 62. Let’s also say they were receiving a reduced amount of $1,600 per month as opposed to their primary insurance amount of $2,000 (which they would have received if they waited until full retirement age).
You will collect the larger of the two monthly numbers: your deceased spouse’s reduced monthly benefit of $1,600 or 82.5% of your deceased spouse’s primary insurance amount of $2,000. You would get $1,650 per month because 82.5% of $2,000 is larger than the reduced monthly benefit the spouse was receiving while they were still alive.
Okay, now the fun part. If your deceased spouse started taking their benefits before their full retirement age, and you (the surviving spouse) start taking your spousal benefits before your full retirement age for survivors, the perfect storm happens, if you will.
If you have read some of my other articles, you have heard me mention William Reichenstein and William Meyer’s book, Social Security Strategies. Once again, they have produced the simplest and easiest way to explain how this works. Three amounts will need to be calculated: first, the deceased’s retirement insurance benefit; second, 82.5% of the deceased’s primary insurance amount; and third, the reduced survivor’s insurance benefit. Then you need take the lower number.
Take the same example above, except in this example the surviving spouse begins benefits at age 60 rather than waits until their full retirement age for survivors. Additionally, the deceased spouse claimed their benefits early at age 62 and they were receiving a reduced amount of $1,600 per month as opposed to their primary insurance amount of $2,000 they would have received if they waited until full retirement age. You will now have to use the following formula . . . .
Take the deceased’s reduced monthly benefit of $1,600 or 82.5% of their primary insurance amount, $2,000 (whichever is larger). This means the survivor would get $1,650 per month because 82.5% of $2,000 is larger than the reduced monthly benefit the spouse was receiving while they were still alive.
Now you have to the calculate the reduced survivor’s insurance benefit. To do that, you take the survivors benefit percentage at age 60 of 71.5% and multiply that by the deceased spouse’s primary insurance amount of $2,000 which equals $1,430.
Finally, you take the lower of the two. Therefore, the survivor’s monthly benefit would be $1,430.
See that wasn’t so bad, LOL!
What if I am divorced and my ex-spouse dies? Am I eligible for benefits?
The answer is yes, provided you were married for at least 10 years. You would be eligible for the same widow or widower benefits.
According to SSA.gov, if you remarry after age 60 (age 50 if you’re disabled) the remarriage will not affect your eligibility for survivors benefits.
What should I do?
There are some interesting planning and claiming techniques that should be considered and analyzed. Naturally, it is not always a clear, easy decision. Hopefully, I can make things easier for you.
Generally, if the surviving spouse can grow their retirement benefits to exceed their survivors benefits, they would want take survivors benefits first and then switch to their retirement benefits at age 70.
If you cannot grow your retirement benefits at or by age 70 to exceed your survivors benefits, then you want to do the exact opposite: begin your retirement benefits and switch to survivors benefits at the full retirement age for survivors.
As we discussed, it is possible to let your retirement delay and accumulate credits to age 70, which may end up being larger than your spousal benefit. If that is the case, then you should switch to your retirement benefit at age 70. If not, then you should just keep your survivors benefit for the rest of your life.
An easier decision is if the surviving spouse was the higher earner. Why is this easier? I am glad you asked. The survivor’s retirement benefits based on their earnings record can continue to receive delayed retirement credits until they begin up to age 70.
For example, if the surviving spouse has a full retirement age of 66 and they have not claimed their benefits yet they can continue to delay until age 70 and keep receiving an approximate 8% growth on their benefits. In the meantime, until they reach age 70 they can claim their survivors benefit while allowing their retirement benefits to accrue. Then, at age 70, they can switch from survivors benefits to their retirement benefits.
I know what you’re thinking: What if I start taking my benefits and then my spouse dies? Can I stop my benefits so I can accrue delayed retirement credits to age 70? Yes, if your spouse passes away in the first 12 months of you claiming your strategy. The Social Security Administration affords you the opportunity to undo your decision and repay the benefits you received.
I had the pleasure of listening to a presentation from the aforementioned William Reichenstein and Social Security Solutions. They had some great case studies that I would like to share with you.
Case Study 1: The Higher Earner Dies First
- There is a husband and wife, and the husband dies and his monthly benefit is $2,200 per month.
- The surviving spouse is 66 years old.
- The surviving spouse has a primary insurance amount of $2,000. She has not started collecting benefits and will continue to accrue delayed credits of 8% per year until age 70.
- The full retirement age for retirement and survivors benefits are both at age 66 for her.
- This decision is simple: she should begin survivors benefits of $2,200 per month, and then at age 70 she should switch to her own benefits of $2,640.
Case Study 2: The Lower Earner Dies First
- There is a husband and wife, and the husband dies and his monthly benefit is $1,500 per month.
- The surviving spouse is 66 years old.
- The surviving spouse has a primary insurance amount of $2,000. She has not started collecting benefits.
- The full retirement age for retirement and survivors benefits are both at age 66 for her.
- There are two different strategies that she should be exploring:
- Strategy 1: She begins her retirement benefits today of $2,000 per month for the rest of her life. She never exercises her survivors benefits.
- Strategy 2: She begins survivors benefits today at age 66 of $1,500 per month, and switches at age 70 to retirement benefits based on her earnings records of $2,640 per month. This strategy allows her benefits to accrue delayed credits of 8% per year until age 70.
- The break-even point where the second strategy starts to provide more cumulative benefits is at age 73. If she is in good health and has a longer life expectancy than age 73, the second strategy should be seriously considered.
Fitting Everything Together
When you are planning for spousal benefits, not only do you need to account for and study the strategies discussed in my article Why Knowing When to File for Social Security is Difficult — Really Difficult, you also need to account for the survivor strategies we discussed in this article. What makes it most difficult is the decision that appears to be correct while you are still living might not be the best decision for your spouse.
Additionally, if you want a comprehensive review, please take a look at our Social Security Solution Program. I put this program together from the feedback I have received from clients and readers of Social Security Teacher. This solution is designed specifically for those of you who want help and guidance in making the best decision for you and your family. I am a CERTIFIED FINANCIAL PLANNER™ professional, and have the experience to help you get there.
Still feel stressed? Do what I do: sit down and listen to one of your favorite music albums. I promise you it will put you in a good mood. ☺ I recommend listening to Big Joe Turner, I promise you will be dancing all around your house!
Shoot me an email with one of your favorite artists or albums. I would love to hear it. Oh, and of course any questions about Social Security.
- 1 Social Security Administration publication: Survivors Benefits: https://www.ssa.gov/pubs/EN-05-10084.pdf
- Social Security Strategies, by William Reichenstein and William Meyer
- Survivor Strategies presentation from Social Security Solutions and William Reichenstein