Social Security Survivor Benefits

Over the last 6 months or so, many questions have come into the office about Social Security Survivor benefits, so let's review this important benefit and talk about how to coordinate it with other benefits a widow or widower might be entitled to.

First, the basic rule:

If a person's spouse dies, the widow(er) becomes entitled to a reduced survivor benefit as early as age 60 or the full benefit at full retirement age.

Example: Jane's husband, John, died at age 57. Jane has not remarried. When Jane turns 60, she will be entitled to a survivor benefit equal to 71.5% of John's PIA. If she waits until her full retirement age to claim, the survivor benefit will be equal to 100% of John's PIA.

Now for some nuances that can help you maximize widow(er)s' Social Security benefits.

If a widow is also entitled to a benefit based on her own work record, it is possible to sequence the receipt of survivor benefits and retirement benefits for maximum advantage. When a widow files for benefits, she can specify which benefit she wants to receive. Then she can switch to the other benefit later.

Example: Continuing with the above example, let's say John's PIA is $2,000, and Jane's PIA is $800. If she files for her survivor benefit at age 60, she will receive 71.5% of $2,000, or $1,430. This will be her permanent benefit, increased only by annual COLAs. She will never be able to draw her own benefit, because her $800 PIA, even with maximum delayed credits to age 70, would never be more than $1,056 ($800 x 1.32). In other words, she would never switch to her own benefit. So in this case, Jane should maximize the survivor benefit by applying for it as late as possible. Since survivor benefits don't earn delayed credits after FRA, she can receive the maximum survivor benefit of $2,000 by applying for it at age 66. (We are ignoring COLAs for these illustrations.) So the best strategy for Jane would be to file for her own benefit at 62 and receive 75% of $800, or $600 for four years, and then switch to the $2,000 survivor benefit when she turns 66.

Conversely, if a widow's own benefit has a chance of exceeding the survivor benefit due to increased earnings or delayed retirement credits, she can take the survivor benefit early and switch to her own benefit at age 70.

Example: Now let's say Jane's PIA is $1,800. This is her age-66 benefit. If she delays to age 70, it will earn 8% annual delayed credits giving her a benefit of $2,376 ($1800 x 1.32). So in this case, she can start her survivor benefit as early as age 60, receive $1,430 (71.5% of John's $2,000 PIA) for ten years, and then switch to her own maximum benefit of $2,376 when she turns 70.

Here are some other considerations.

The survivor benefit will depend on when the deceased spouse initially claimed his benefit. If he claimed before FRA, the survivor benefit will be reduced. If he claimed after FRA (or if he died after FRA but before claiming) the survivor benefit would include any delayed credits earned up to the date of filing (or date of death if earlier).

Example: In the above example, John died at age 57, before he was eligible for Social Security. Jane's survivor benefit was therefore based on John's PIA. If John had died at age 62 immediately after filing for Social Security, Jane's survivor benefit would be based on a special calculation equal to 82% of John's PIA, or $1,640. I say "based on" because Jane's actual survivor benefit will depend on when she files. If she files at 62, it will be 81% of the $1,640, or $1,328. If she files at her FRA, it will be the full $1,640. If John had died at 62 without having filed for Social Security, Jane's survivor benefit would be based on John's full PIA of $2,000. And if John had died at age 70, after delaying filing until then, Jane's survivor benefit would be based on John's maximum benefit of $2,640 ($2,000 x 1.32). See why we strongly encourage the high-earning spouse to delay filing? It can make a huge difference in the surviving spouse's lifetime income.

Survivor benefits are subject to the earnings test before FRA. $1 in benefits will be withheld for every $2 earned over $14,640.

Example: We are advising Jane, in the above examples, to either apply for her own benefit at 62 or her survivor benefit at 60. But she should know that while she is under age 66, $1 in benefits will be withheld for every $2 she earns over $14,640. Now, the benefit will be adjusted at FRA to give her credit for withheld benefits (i.e., instead of the survivor benefit being 71.5% of John's PIA it might be adjusted to 80% or 85% of his PIA). So she will never be worse off for working. But she does need to be aware that some checks may be withheld if she works. If she earns enough that all of her benefits would be withheld, then the advice would be for her to stay away from SSA until she turns 66. At that time she would file for her survivor benefit. If, when she turns 70, her own DRC-enhanced benefit would be higher, she can switch. If not, she would stick with the survivor benefit, which is already maximized because she waited until FRA to file for it.

Remarriage before age 60 disqualifies a widow for survivor benefits— until that marriage ends.

Example: Let's say that a year after John died, Jane married Jack at age 58. When she turns 60 she is not eligible for a survivor benefit because she is currently married and the marriage took place before age 60. She may, of course, be entitled to a spousal benefit based on Jack's earnings when she turns 62. Basically, Jane and Jack are like any other married couple for whom you would coordinate and maximize spousal benefits, and you might encourage Jack to delay filing to age 70 in order to maximize his benefit and Jane's future survivor benefit. If Jack dies, Jane now becomes entitled to the higher of the two survivor benefits. At that time, the strategy of coordinating her own benefit with the higher survivor benefit would be the same as the ones we've been talking about.

Remarriage after age 60 does not affect the survivor benefit.

Example: If Jane waits until she is 60 to marry Jack, she could conceivably be entitled to three different benefits: 1) a survivor benefit based on John's record starting at age 60; 2) a spousal benefit based on Jack's record starting at age 62; and 3) her own retirement benefit based on her own work record starting at age 62. Coordinating all these benefits is not as confusing as it seems, because the spousal benefit is likely out of the picture. Her spousal benefit will be only 50% of Jack's PIA if she files at her FRA, while her survivor benefit will be 100% of John's PIA if she files at FRA. The benefit amounts will depend on all the earnings records, of course, and as always, you should obtain all the PIAs before trying to deliver claiming advice.

Divorced-spouse survivor benefits work the same if the marriage lasted at least 10 years.

Example: Let's say that Jane and Jack divorce after 10 years of marriage. If Jack dies, Jane is now eligible for two survivor benefits: one based on John's record and one based on Jack's record. She can choose the higher benefit. If she walks down the aisle a third time, at age 70, she may continue with whichever survivor benefit she is receiving because the remarriage took place after age 60.

If you are aware of a widow or widower that needs our help with this information, we would be happy to spend the time to help them understand.