Many people focus solely on their own retirement benefits when considering Social Security benefits. However, it’s crucial to understand the significant role Social Security spousal and survivor benefits can play in retirement planning.
We don’t usually like to think about our mortality and how our passing will affect those we leave behind financially. Nonetheless, it’s wise, and I would suggest loving also.
As Christians, our hope of heaven and eternal fellowship with the three persons of the Trinity and all the redeemed saints from over the ages helps us deal with this reality (1 Peter 1:3-5).
But our loved ones will have to deal with life, including the financial aspects, without our help when we’re gone. It’s a sobering thought, and it should be.
When the Bible says that we’re supposed to “provide for [our] relatives, and especially for members of his household (1 Tim. 5:8),” it includes those we leave behind after we have “shuffled off this mortal coil and joined the choir invisible.”
(I like that phrase. It suggests the constraints of this earthly existence and the thrill of joining the heavenly choir, which does seem to be a thing—see Rev. 5:11-12. Those unfamiliar with that expression could check out Shakespeare’s famous “to be or not to be” soliloquy from Hamlet and Monty Python’s “Dead Parrot” skit. The latter is pretty funny, in my opinion, but you have to appreciate their humor.)
This article delves into the details of survivors’ benefits beyond what I touched on in “Loving Your Widow(er). I’ll explain who’s eligible, how they are calculated, and why they’re a critical component of wise stewardship and retirement income planning for couples.
What are survivors benefits?
Survivor benefits are a type of Social Security benefit available to eligible individuals following the death of a spouse or ex-spouse. Like retirement and spousal benefits, survivor benefits are based on the earnings history of the deceased individual.
You can receive survivor benefits as early as 60, two years earlier than regular spousal benefits (62), and in special cases, even earlier.
To qualify, you have to have been married for at least nine months. (I’m not sure where the SSA came up with that, perhaps because it’s more than a month and less than a year. I’m pretty sure it has nothing to do with having babies.)
Another major qualification is that the deceased must have earned sufficient “credits” to qualify for benefits by the time of their death.
How are benefits calculated?
There are different scenarios that determine how a survivor’s benefit is determined. The amount of a survivor benefit depends on several factors:
- Whether the deceased spouse had already filed for their benefits (blue boxes below)
- When they started receiving their benefits (yellow boxes)
- The survivor’s filing age, any credits, and the amount of the deceased’s benefits if they were receiving them (green boxes)
Note: “FRA refers to a benefit recipient’s full retirement age, the age at which they’re entitled to 100 percent of their Social Security benefits. For most people, it’s between age 65 and 67.”
Source: SSA
Survivor Benefit Scenario Calculations
Scenario #1 – Died before receiving benefits
As you can see in the chart, if a spouse dies before filing for benefits, regardless of whether they die before or after their FRA, their survivor will receive 100% of the deceased full retirement age (FRA) benefit (adjusted for the survivor’s age).
Moreover, if the survivor receives survivor benefits before their FRA, their benefits will be reduced to between 71.5 percent and 99 percent of the deceased benefit.
The percentage gets higher the older the survivor is when they claim.
If the survivor is already receiving normal retirement benefits, their survivor benefits will be theirs or their deceased spouse’s retirement benefit, whichever is larger.
Scenario #2 – Filed on or after FRA
This is my situation and that of my wife. I filed at my FRA and was alive at the time (or so I think). My wife started receiving her spousal benefits at the same time. If I should predecease her, her survivor benefit would be calculated based on my age when I filed, which happened to be 66 and 2 months, my FRA.
Since I filed on or after my full retirement age, my surviving spouse will be entitled to the benefit I am receiving when I die (which is already much larger than when I filed due to five years of cost of living adjustments (COLAs).
The surviving spouse’s benefit will be reduced if they file for it before their full retirement age, but that’s not our situation.
My wife currently receives a spousal benefit of 50% of my normal benefit. If I should predecease her, our total household benefit will be reduced by her spousal benefit, but her survivor benefit will replace it and will be my full benefit at the time of my death, effectively doubling her spousal benefit.
To illustrate, let’s say my benefit is $30,000 per year, and hers is $15,000, a total of $45,000 before Medicare Part B deductions and taxes. As my survivor, she would receive my $30,000 benefit less her Medicare Part B premiums and taxes. How much tax she would pay would depend on her other income.
In a case like ours, the lower-earning spouse’s benefit increases substantially, which is a really good thing.
The situation will be different if my wife predeceases me. Since I have the larger normal retirement benefit, my benefit amount would not increase; it would remain the same: $30,000.
It works that way because survivors’ benefits are up to 100% of the deceased spouse’s retirement benefit, not 50% like spousal benefits. Since I am receiving retirement benefits and filed at my FRA, my wife’s survivor benefit will be 100% of that amount.
Scenario #3 – Filed for benefits before their FRA
If the deceased had already filed for benefits but did so before their FRA, the survivor’s benefit would be reduced. The surviving spouse’s benefit is still based on the deceased FRA but is adjusted for their filing age.
The survivor’s benefit is also limited to a maximum of the deceased’s actual benefit or 82.5% of the deceased’s FRA benefit. This limitation is often referred to as the “widow’s limit,” but its technical name is the “Retirement Income Benefit – Limitation” ( RIB-LIM).
Clarifying the caveats
It doesn’t matter when someone starts receiving their retirement benefit (i.e., before FRA, after FRA, or never); spousal survivor benefits are always based on that person’s FRA benefit. However, as discussed earlier, they can be adjusted for various reasons.
For example, if I had started early and received an annual benefit of $24,000/year instead of $30,000, my wife would receive the larger of her normal benefit (if she qualified for one) or her spousal benefit. Since she did not qualify for a normal benefit, she would receive a spousal benefit, which would be reduced to $12,000 (0.50 x $24,000 = $12,000).
But my wife’s survivor benefit would be up to 100% of my actual retirement benefit. No matter when I start receiving them, the decreases or increases in my benefits will be passed on to her. In the example above, my wife’s survivor benefit would be $24,000, twice her spousal benefit, but less than it would have been if I had waited until my FRA to file.
If I had waited beyond my FRA to receive my benefits, my wife’s spousal benefit would have been 50 percent of my FRA benefit, and her survivor benefit could have been more than my FRA benefit.
Let’s say I delayed and started receiving benefits at age 70, increasing them by 32% to $39,600. My wife would receive spousal benefits of $15,000 (0.50 x $30,000=$15,000), but her survivor benefit would be 100 percent of $39,600.
The key lesson here is that it is sometimes best for the higher-earning spouse to delay receiving benefits, as this increases their benefit and their spouse’s survivor benefits, but not their spousal benefit.
We have also seen that the opposite is true. Suppose you claim retirement benefits before your FRA. In that case, you will ‘pass on’ a survivor benefit that is lower than it would have been had you died before receiving any benefits or waited and started receiving benefits at your FRA.
Government gotcha
There’s a thing known as the “Government Pension Offset (GPO).” According to the SSA, the GPO limits,
“Social Security spousal or widow(er) benefits for people who receive ‘non-covered pensions.’ A non-covered pension is a pension paid by an employer that does not withhold Social Security taxes from your salary, typically, state and local governments or non-U.S. employers.”
Source: SSA
A widow(er) eligible for a public pension and survivor benefits based on the Social Security eligibility of a deceased spouse or ex-spouse will have those Social Security benefits reduced by the GPO. The reduction is the same as for spousal benefits, which is two-thirds of the pension amount.
For example, if Mary were entitled to a public pension of $1,800 per month and Social Security survivors benefits of $2,400 per month after her husband David’s death, the GPO reduction would be two-thirds of $1,800, or $1,200 per month. Her Social Security survivor benefits would then be lowered to $1,200 monthly.
Notice that spouses covered by a pension may have their Social Security spousal benefits entirely offset by the GPO but still be eligible for a survivor benefit. Spousal benefits are up to 50 percent of the worker’s Full Retirement Age benefit, and survivor benefits are up to 100 percent of the worker’s own retirement benefit if they had begun receiving it or their Full Retirement Age benefit if not.
Two-thirds of the spouse’s public pension might exceed 50 percent of the worker’s Full Retirement Age benefit but not exceed 100 percent of the worker’s actual retirement benefit.
Who else is eligible?
We’ve mainly discussed surviving spouses, who may be eligible to receive benefits as early as 60 (or even 50 if disabled). However, others may also be eligible.
As with spousal benefits, divorced people who were married for ten years or more and have not remarried might also be eligible for survivor benefits. The divorced spouse must be age 60 or older.
An exception is a surviving or divorced spouse younger than 60 if they are caring for the deceased worker’s dependent child who is younger than 16 or disabled.
However, the effects of remarrying introduce some eligibility complexities.
A widow or widower who remarries before age 60 loses survivor benefits through the deceased spouse. However, a widow or widower who remarries after age 60 does not lose survivor benefits through the deceased spouse.
Someone who was divorced from the deceased worker after at least ten years of marriage is eligible for survivor benefits even if they remarried before age 60 but then were widowed or divorced again.
Whew! Confused? If this pertains to you, read this helpful publication from the SSA: Survivors Benefits.
The SSA operates several programs in addition to the retirement benefits program. One of those programs provides dependent benefits to the family of a deceased or disabled worker who has earned the required number of work credits before death.
Under that program, unmarried dependent children under 18 (or 19 if a full-time high school student) and disabled children of any age who were severely disabled before age 22 and are still disabled may qualify.
Also, one or both parents of the deceased worker who were at least 62 and dependent on the worker for at least half of their support may be eligible. (This is a complicated situation, so consult with the SSA.)
Importance of survivor benefits in your claiming strategy
When you claim early retirement benefits, the amount you receive is generally “locked in” apart from future cost-of-living adjustments (COLA increases). However, this does not lock in the survivor’s benefit.
If the higher-earning spouse has not filed for benefits, the lower-earning spouse can claim early benefits starting at age 62 and then switch to a larger spousal benefit later on when their spouse files.
Furthermore, depending on your circumstances, you can switch to a larger survivor benefit or vice versa. The Social Security Administration (SSA) has different policies regarding these “lock-in” provisions for survivors and spousal benefits.
From a long-term planning standpoint, survivor benefits may be more critical than spousal benefits. When a spouse dies relatively early, the surviving spouse may receive many more survivor checks than regular retirement or spousal benefits.
Therefore, depending on their other income sources, the couple may want to implement a benefit-claiming strategy that maximizes survivor benefits. Rather than maximizing current income in their 60s, they may want to consider a strategy that maximizes a surviving spouse’s income in their 80s.
The best way to do that is to delay your benefits to age 70, which maximizes your primary and survivor benefits.
Married couples should always consider the impact of their benefit-claiming decision on the finances of the lower-earning spouse.
Suppose the surviving spouse elects to receive these survivor benefits before their full retirement age. In that case, the benefit will be reduced similarly to how spousal benefits are reduced if received before full retirement age, but in a different amount.
An estimate of the reduction can be found using a calculator on the SSA website. In general, receiving the survivor’s benefit at the earliest age of 60 will provide about 71 percent of the full benefit.
Loving your survivor
If you have a spouse, one of you will eventually be a survivor. So, any decision the high-income earner/SS benefits recipient makes will have significant consequences for the survivor.
For example, a survivor could start receiving survivor benefits and let their retirement benefits continue to grow until age 70. Delaying retirement benefits can result in increased monthly payments through delayed retirement credits.
As you can see from this article, the SSA rules governing survivor benefits are nuanced and complex. Fortunately, more detailed information about survivors benefits can be found on the Social Security Administration’s (SSA) survivors’ planning website.
But no matter what, try to make sure that both you and your spouse have a basic understanding of these provisions; you don’t necessarily know which of you will be the survivor. That’s in God’s hands (Job 14:4).