Losing a spouse is difficult, but it can be comforting to know that Social Security survivors benefits could help keep your financial house in order in the years ahead.
Roughly 6 million widows and widowers receive monthly Social Security checks based on their deceased spouse’s earnings record, a significant source of financial support.1
To maximize the amount you receive in survivors benefits, however, it is important to consider the rules and available claiming strategies carefully.
“The big mistake for anyone to make when filing for Social Security benefits is not understanding all of the choices that exist based on their age, health, and marital status,” said David Freitag, a financial planning consultant with MassMutual. He also noted that financial advisors typically have access to retirement income planning software tools that can help. “An advisor can be of tremendous help by providing information when his or her client is making the Social Security benefit election.”
Timing is everything
If your deceased spouse earned enough credits during his or her working years, you may begin collecting survivors benefits as early as age 60, but your benefit will be permanently reduced by a fraction of a percent for each month before your full retirement age.
If you choose to file for benefits early, you should understand the financial consequences, said Scott Bishop, a financial advisor with STA Wealth Management in Houston, Texas.
“Remember, in its basic benefit, Social Security is old-age insurance or longevity insurance," he said. “It’s intended to be money to help assure that you won’t live so long that you have no ability to support yourself.”
A 2019 MassMutual Social Security Pulse Check survey found that many who file for Social Security retirement benefits early or even at their full retirement age later regret not holding out for a bigger benefit. About 30 percent of respondents filed at age 62 or younger, and nearly four out of 10 (38 percent) of them wished they had waited.
Some indicated that they filed when they did because they had undersaved and could not afford to wait, while others needed the monthly income to cover medical bills, a loss of employment, or other unforeseen expense. “This study reveals that many are leaving money on the table that they’re eligible for — and that they could have received for many years to come,” said Mike Fanning, head of MassMutual US. “Planning ahead for the foreseen — and the unforeseen — appears to be the ‘pay it forward’ message from today’s to tomorrow’s retirees.”
Calculator: How much should I save for retirement?
Depending on the year you were born, your full retirement age is either 66 or 67. You will collect the full amount to which you are entitled — either your own benefit, or up to 100 percent of your deceased spouse’s benefit, whichever amount is greater — by waiting until your full retirement age.
Survivors benefits are worth 100 percent of the deceased worker’s benefits, which includes any delayed retirement credits he or she may have earned by postponing benefits beyond their full retirement age. Individuals born in 1943 or later who have reached full retirement age and wait to file for benefits can earn delayed retirement credits of 8 percent per year, up until age 70. This can increase monthly benefit amounts down the road by up to 32 percent. After you reach age 70, the benefit of delaying any further disappears.
Who is eligible for Social Security survivors benefits?
Widows and widowers may receive full benefits at their full retirement age or reduced benefits as early as age 60. Those with a disability that started before or within seven years of the worker’s death may begin collecting benefits as early as age 50. You may also receive survivors benefits at any age if you care for a minor child (under age 16) of the deceased worker, or if that child is disabled and receiving Social Security benefits based on the worker’s record.
If you get remarried after age 60, or age 50 if disabled, your new marriage status will not affect your eligibility for survivors benefits. However, be aware that if your current spouse is also eligible for Social Security and earns more than your former spouse, you may wish to apply for spousal benefits based on your new spouse’s record instead.
Others who may claim Social Security survivors benefits include unmarried children of the deceased who are younger than age 18 (or up to age 19 if he or she is a full-time student in elementary or secondary school), surviving divorced spouses under certain conditions, and parents who are age 62 or older who were dependent on the deceased for at least half of their support.
Widows and widowers who collect a survivors benefit, but also qualify for a benefit on their own, may potentially collect a survivors benefit in the early years of retirement and leave their own Social Security benefit to accrue delayed retirement credits. They may then switch to their own (augmented) retirement benefit as late as age 70.
Let’s look at an example of how survivors benefits might work for one widow — Kathy.
Kathy is 66 years old, in good health, and nearing retirement. Bill, her deceased husband, was already collecting his full retirement age benefit when he died, which was about $300 more than hers. Kathy would like to retire and move closer to her children, but she wonders whether she should continue working a bit longer and delay taking her Social Security benefit to increase the size of her monthly checks.
As a new widow, Kathy has some important decisions to make, including how and when to file for her Social Security benefits. Her benefit filing strategy can have a significant impact on her monthly cash flow and on the benefit she receives over her lifetime.
Like anyone eligible for Social Security, Kathy could file for benefits starting at age 62 and accept a reduced monthly payout for life; she could delay her retirement benefit until her full retirement age (66) and collect 100 percent of the benefit to which she is entitled; or she could delay claiming Social Security beyond her full retirement age to increase the size of her future benefit. If she waits until age 70, she would increase the size of her monthly benefit by as much as 32 percent for the rest of her life.
As a widow, however, she also has another option. She could file for a survivors benefit at her full retirement age based on Bill’s earnings record, letting her own retirement benefit accrue delayed credits until age 70, at which point she would stop her survivors benefit and switch to collecting her own benefit. Under this scenario, Kathy could potentially collect tens of thousands of dollars more, if she lives until age 85 or older, than she would if she never filed for survivors benefits.
Please be aware that you cannot apply for survivors benefits online. You must either call 800-772-1213 or contact your local Social Security office.
Because the rules related to survivors benefits are complicated, the federal government suggests that you talk it through with a Social Security representative. When you visit or call, ask for the amount of your survivors benefit and, if you are eligible to receive an individual retirement benefit, what that benefit amount would be at different filing ages.
Your financial advisor can also help you explore the different filing strategies that might work best for you.
1 The Board of Trustees, Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, “2017 Annual Report,” July 13, 2017.