Social Security spousal and survivor benefits: Different and not equal

David G. Freitag

By David Freitag CLU, ChFC, CRPC
David Freitag is a financial planning consultant and Social Security expert for MassMutual.
Posted on Aug 2, 2021

The Centers for Disease Control and Prevention reports that 8 out of 10 of people we have lost due to COVID-19 are age 65 and older. Which means that tens of thousands of surviving single spouses are now faced with an important and very strategic decision about how to handle Social Security survivor benefits.

Survivor benefits are quite different from spousal benefits. Survivors have different choices that are not available to spouses while both are alive. For example:

  • Spousal benefits can only begin at age 62.
  • Survivor benefits can start as early as age 60.
  • Survivor benefits are also available to spouses who are taking care of the worker’s dependent minor children under the age of 16.
  • Spousal benefits are capped at 50 percent of the worker’s benefit.
  • Survivor benefits are set at 100 percent of the deceased worker’s benefit.

In addition to these major differences, survivors have the ability to exercise something called the “restricted filing” strategy.

Spouses born after January 1, 1954, do not have access to this strategy, but survivors do.

What is restricted filing?

Restricted filing allows a widow or widower to collect benefits from the spouse who died while earning delayed retirement credits on their own record. Delayed retirement credits increase the survivor’s benefit by up to 8 percent simple interest per year between their current age and age 70. (Related: Social Security filing tactics)

Here is an example of how restricted filing would work for Mary, who lost her husband Bob. Mary was 66 years old when Bob died.

  • Bob was collecting $2,800 a month in Social Security benefits based on his work record.
  • Mary has a benefit based on her own work record of $2,600 a month starting at her full retirement age of 66 and 2 months.
  • Using the restricted filing strategy, Mary can collect $2,800 a month from Bob’s record until she is age 70.
  • At that time, Mary will switch from Bob’s record to her own work record. The delayed retirement credits will increase her own monthly benefit to $3,397 a month for the rest of her life.

If Mary did not know about the restricted filing strategy and lived to age 90, the cumulative difference between filing on her own record at 66 versus following the restricted filing strategy would be more than $139,883. If you add in a 1.5 percent assumption for annual cost-of-living increases, the cumulative difference is more than $172,000. If cost-of-living increases average over 2.5 percent per year the cumulative difference is more than $198,000.

In this situation, Bob’s Social Security benefit allows Mary to directly collect from his record for almost four years. Then at age 70, Mary can receive the maximum amount from her own record for a long as she lives. This is a powerful legacy from Bob and a gift to Mary.

Sometimes, the restricted filing strategy is not the right path to follow for a survivor. For a different example, let’s look at Nancy, who is age 63 when her husband Allen died.

  • Nancy has a full retirement age benefit of $1,500 on her own record, while Allen was collecting $2,900 on his own record when he died.
  • It might be best for Nancy to start collecting $1,150 from her own record at age 63 until she reaches her full retirement age of 66 and 8 months. Because Nancy started taking benefits before her full retirement age, her benefit was reduced for early filing. 
  • When Nancy reaches her full retirement age she would continue collecting from her own record and add the survivor benefit from Allen’s record.
  • This strategy would now pay Nancy $1,150 from her own record plus a survivor benefit from Allen’s record of $1,750 a month.
  • The combination of the two benefits is $2,900 a month, exactly what Allen was receiving when he died.

Allen’s survivor benefit paid to Nancy acts like a shock absorber to guarantee that Nancy will receive the maximum benefit for the rest of her life. This strategy will cumulatively pay Nancy over $74,000 more than if she had just filed on her own record. If you include a 1.5 percent annual cost of living increase, the cumulative difference is more than $104,000. Higher cost-of-living increases amplify these differences dramatically.

When it comes to Social Security choices, it is very important to be your own best advocate. The employees of the Social Security Administration are not planners, and they certainly do not know all unique differences about each worker’s situation. Their important job is to respond to the wishes and requests of the workers who have paid into the system. Survivors must let the Social Security Administration know about which choices best work for their set of life circumstances and not rely or depend on guidance from the government. Many turn to a financial professional for advice. (Need a financial professional? Find one here)

But remember, final decisions about Social Security filing strategies always rest with you and should be based on your specific needs and health considerations. It is important to acquire as much information as possible so that you can make an informed Social Security claiming decision; one year after the Social Security claiming decision is made, options for change are extremely limited.

The tragedy of COVID-19 will be part of our lives for years and years to come. It is important to remember that survivor benefits are not the same as spousal benefits. There are more choices available to survivors, and survivors must know which strategy will work best for them in the future.

For more information or copies of publications, or to set up your Social Security myAccount, visit the Social Security Administration website at www.ssa.gov or call toll free at 1-800-772-1213 (TTY 1-800-325-0778).

Discover more from MassMutual …

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Setting financial goals: Retirement

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The information provided is not written or intended as specific tax or legal advice. MassMutual, its subsidiaries, employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own, and do not necessarily represent the views of MassMutual.