{"id":279,"date":"2023-01-18T11:40:02","date_gmt":"2023-01-18T11:40:02","guid":{"rendered":"https:\/\/www.jrhastingslaw.com\/?post_type=newsletter&p=279"},"modified":"2023-01-18T11:40:02","modified_gmt":"2023-01-18T11:40:02","slug":"understanding-social-security-survivor-benefits","status":"publish","type":"newsletter","link":"https:\/\/www.jrhastingslaw.com\/newsletter\/understanding-social-security-survivor-benefits\/","title":{"rendered":"Understanding Social Security Survivor Benefits"},"content":{"rendered":"\n\n\n\n\n\n
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Volume 5 Issue 5<\/b><\/div>\n
ElderCounselor<\/div>\n
Understanding Social Security Survivor Benefits<\/strong><\/span><\/div>\n<\/div>\n<\/td>\n<\/tr>\n
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An earlier issue of The ElderCounselor addressed social security benefits generally and when to apply. In this issue we\u2019ll address the critical yet often-misunderstood topic of Social Security survivor benefits. This e-newsletter is based in part upon an article by Frank Rainaldi and William Rainaldi, first published in Trusts & Estates magazine and available on WealthManagement.com<\/a>.<\/p>\n

Survivors Benefits<\/strong>
\nAccording to the Social Security Administration, a surviving spouse may be eligible to receive the deceased spouse\u2019s full retirement benefits at full retirement age (\u201cFRA\u201d). \u00a0For survivor benefits only, FRA is 66 for anyone born before 1957, and it increases two months every year until it reaches 67 for those persons born in 1962 or later. (For a regular retirement or spousal benefit, FRA is 66 for anyone born before 1955 and it increases two months every year until it reaches 67 in 1960.)\u00a0 (E.g., see http:\/\/www.ssa.gov\/pubs\/EN-05-10084.pdf<\/a>.)<\/p>\n

Simply stated, survivors benefits are determined by looking first at the age of the deceased spouse, and then at the age of the surviving spouse.\u00a0 In other words, we look at the amount of the benefit available to or being paid to the deceased spouse<\/i>.\u00a0 Then, we use the age of the surviving spouse<\/i> to determine if benefits are paid early or at FRA; if the surviving spouse\u2019s benefits are paid before 65, we must apply an actuarial reduction to the deceased spouse\u2019s benefits.<\/p>\n

It\u2019s important to note a key difference between survivor benefits and spousal benefits.\u00a0 Spousal retirement benefits provide a maximum 50% of the other spouse\u2019s primary insurance amount (PIA). Alternatively, survivors\u2019 benefits are a maximum 100% of the deceased spouse\u2019s retirement benefit.<\/p>\n

Also note the difference between the PIA and retirement benefit, which is critical when considering deferred retirement credits (DRCs).\u00a0 DRCs can increase benefits by 8% per year when the worker elects to start collecting after FRA, up to a maximum increase of 32% for deferral to age 70. Note, however, that DRCs apply only for survivor benefits; DRCs don\u2019t increase the PIA and thus they are not applicable to spousal benefits. Therefore, if one spouse has the higher personal benefit and waits until age 70 to begin collecting, the full benefit with DRCs would be payable to the surviving spouse.<\/p>\n

The Most common Scenario \u2013 Both Spouses Reach FRA<\/strong>
\nThe most common scenario is when death occurs after both spouses have reached their respective FRA.\u00a0 In this case, the survivor benefit is simply the higher of the two benefits.\u00a0 If one spouse is collecting $2,500 and the other is collecting $2,000, the surviving spouse\u2019s benefit would be $2,500.\u00a0 It actually doesn\u2019t matter which spouse dies, the survivor benefit is still $2,500.<\/p>\n

For example, assume Mr. A has a personal benefit of $2,000, the amount he would receive at age 66.\u00a0 If he elects to defer until age 69 he would get a 24% increase in his personal benefit to $2,480.<\/p>\n

Now let\u2019s say Mrs. A. never worked outside the home.\u00a0 When Mr. A. is age 66, the spousal benefit would be 50 percent, or $1,000. Note, however, that the spousal benefit would still be $1,000 (not $1,240) when he\u2019s age 70 because the 24% increase doesn\u2019t apply to spousal benefits.\u00a0 But DRCs do apply to survivor benefits.\u00a0 So when Mr. A. dies, Mrs. A. would get the full $2,480 as a survivor benefit.<\/p>\n

What if the first spouse dies prior to age 62?\u00a0 The benefit will be the deceased worker\u2019s recalculated PIA, which is based on a different set of assumptions.\u00a0 It uses the worker\u2019s earnings for a \u201csubstitute year\u201d and a different set of required Social Security credits for the applicable age.\u00a0 This special PIA calculation can only help; it can\u2019t hurt.\u00a0 It only applies if it provides a higher PIA then the regular PIA calculation.<\/p>\n

What if death occurs after age 62 but prior to FRA after taking early retirement benefits?\u00a0 The benefit will be the deceased worker\u2019s reduced retirement benefit.\u00a0 This is one good reason not to retire early.\u00a0 Note that there\u2019s a minimum benefit of 82.5% of the deceased worker\u2019s PIA, not including any actuarial reduction in benefits.<\/p>\n

Surviving Spouse Collects Early<\/strong>
\nIf the surviving spouse elects to collect before her own FRA, as with other Social Security retirement benefits there\u2019s an actuarial reduction.\u00a0 For a personal, spousal or divorced spouse\u2019s benefit, one can start as early as age 62.\u00a0 But a surviving spouse can start collecting as early as age 60.\u00a0 If the survivor benefit is at FRA or later, there\u2019s no actuarial reduction.<\/p>\n

It\u2019s important to note that the surviving spouse has additional options.\u00a0 Suppose the surviving spouse is age 60 and not collecting any benefits. When the other spouse dies, she has the option of receiving her actuarially reduced personal benefit, then later switching to a full unreduced survivor benefit at FRA.\u00a0 This could limit the downside of collecting early.<\/p>\n

To determine the monthly reduction amount, simply take 28.5% divided by the number of months between age 60 and the survivor FRA determined above.\u00a0\u00a0 The \u201cWidow Limit\u201d caps the survivor\u2019s benefit at the larger of the benefit the deceased would have received if he or she were still alive, or 82.5% of the deceased PIA. This Widow Limit only comes into play if the deceased claimed benefits prior to his or her FRA. The following, from SocialSecurityTiming.com, graphically explains these options.<\/p>\n

\"Surviving<\/p>\n

Examples<\/strong>
\nSuppose the surviving spouse started collecting a reduced personal benefit at 62, and her spouse dies when she\u2019s 64.\u00a0 At that point, she has the option of continuing to collect her personal benefit for two more years and then switching to a full, unreduced survivor benefit at age 66.<\/p>\n

Of course, the survivor cannot collect both benefits at the same time; the survivor must choose one or the other.\u00a0 And only one switch is allowed.\u00a0 If the surviving spouse is already collecting a personal benefit, she couldn\u2019t go from a personal benefit to a survivor benefit and then back to the personal benefit.<\/p>\n

Understanding survivor benefits is especially important when there is a significant age difference between the two spouses.\u00a0 When one spouse may outlive the other by a considerable margin, survivor benefits are a much more important than \u201cfile and suspend\u201d or \u201cspousal only.\u201d\u00a0 In that case, it\u2019s often a good idea to make sure that the spouse with the higher personal benefit defer until age 70, if possible.<\/p>\n

Divorce<\/strong>
\nA former spouse who is age 60 or older (50-59 if disabled) can get benefits if the marriage lasted at least 10 years. \u00a0However, there is no age or length of marriage requirement if the former spouse is caring for her or his natural or adopted child who is younger than 16 or who is disabled and also entitled to benefits based upon your work.\u00a0 Benefits paid to a former spouse who meets age or disability requirement does not affect the benefits for other survivors based upon the worker\u2019s record. However, the benefits paid to a former spouse who is caring for a minor or disabled child do affect other survivor benefits.<\/p>\n

Remarriage<\/strong>
\nGenerally, the survivor cannot get survivor\u2019s benefits if he or she remarries before age 60. But remarriage after age 60 (or age 50 with a disability) will not prevent the survivor from getting benefit payments based on the former spouse\u2019s benefits. And at age 62 or older, the survivor may get benefits based on the new spouse\u2019s work, if those benefits would be higher.<\/p>\n

Conclusion<\/strong>
\nSocial Security survivor benefits offer a surviving spouse the opportunity to significantly increase her or his benefits based upon the benefits payable to the deceased spouse. Therefore, it\u2019s important that seniors and their loved ones understand how to maximize those benefits. Accessing survivor benefits and understanding what is available is an important piece in helping seniors with their overall planning goals.\u00a0 Please contact our office if you have any questions or if we can be of assistance to someone you know.<\/p>\n<\/div>\n<\/td>\n<\/tr>\n

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Law Offices of J.R. Hastings \u2022 1003 Third Street, San Rafael, California 94901 \u2022 415-450-6692<\/div>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"template":"","newsletter-category":[11],"acf":[],"yoast_head":"\nUnderstanding Social Security Survivor Benefits - JR Hastings<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.jrhastingslaw.com\/newsletter\/understanding-social-security-survivor-benefits\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Understanding Social Security Survivor Benefits - JR Hastings\" \/>\n<meta property=\"og:description\" content=\"Volume 5 Issue 5 ElderCounselor Understanding Social Security Survivor Benefits An earlier issue of The ElderCounselor addressed social security benefits generally and when to apply. 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