The short answer is: it depends. Contrary to popular belief, when your spouse passes away, Social Security survivor benefits are NOT paid to you automatically.
In order to be eligible for benefits as a survivor, you must have been married to the deceased for at least 9 months before their death and must be at least 60 years old.
Depending on your age and other factors, survivors are entitled to the highest benefit that was being received by the couple.
So for instance, if Mark was receiving $2,000 per month and passed away at 75, his wife Tricia who is now 70 could receive the full $2,000 that John was receiving and her lower $1,000 benefit on her own record would stop.
If the highest earner had not drawn any Social Security yet, the survivor is entitled to as much as what the deceased spouse would have received at his/her Full Retirement Age plus any Delayed Retirement Credits that accumulated on the record of the deceased.
One thing that every survivor should do when their spouse passes away is to immediately file a Protective Filing Statement (Form 795) with the Social Security Administration to protect their rights to survivor benefits as of the date of the statement.
This effectively creates (for a 6 month timeframe) a reservation with the Social Security Administration so that the statement date can be used as the filing date for survivor benefits even if actual survivor benefits are not filed for until months later.
If you find yourself in this position, consider working with an advisor to complete this step; you’ll thank yourself for doing so as it can mean the difference between receiving benefits and leaving money on the table.
Survivor Benefits for Those Under Age 70
If you’re a survivor under age 70, in most cases you will be entitled on two records; your own and as survivor based on your spouse’s record. Which record you should take benefits on and when you should take it is crucial to your long-term fiscal health.
You have the ability to claim only one of the two benefits available to you and you can then claim the other benefit at a later time by using something called a Restricted Application. By doing so, the unclaimed benefit will continue to accrue Delayed Retirement Credits.
The timing matters because claiming a survivor benefit under your Full Retirement Age (66 for most people) will result in a reduction in benefits (by as much as 28.5%), however, if you are also eligible for benefits on your own record at a later date, it can often makes sense to still claim a reduced survivor benefit and then switch to your own benefit at a later date. To maximize your overall Social Security benefits however, you need to pinpoint exactly when you should be claiming on each of these records.
If you are younger than your Full Retirement Age however, you need to be careful when it comes and working and claiming a Social Security benefit at the same time. For most, this does not work out well for two reasons. First, once you claim your Social Security benefit, you stop receiving Delayed Retirement Credits which means you’ll receive a lower monthly benefit that if you had waited.
And second, if you claim your Social Security under your Full Retirement Age while working, you will then be subject to the Earnings Test meaning that you the amount of money that you will be able to earn from work will be limited without having your Social Security benefits withheld. For 2017, this limit is $16,920 for most people and if you earn more than this and receive Social Security, the Social Security Administration will withhold $1 in benefits for every $2 that you’re over this limit.
Survivor Benefits for Those Over Age 70
If you’re over the age of 70 and are eligible for a survivor benefit, but have not yet claimed it you should do so as soon as possible. Because with each month that passes you are leaving money on the table given that Delayed Retirement credits stop accumulating at age 70.
Especially for those over 70 and that originally claimed benefits on their own record (as opposed to as a spouse) one of the biggest surprises that many run into is finding out that they should have filed for a survivor benefit when their spouse passed away but they didn’t.
Use the Social Security Rules to Your Advantage
Survivors who are past their Full Retirement Age (66 in most cases) are also eligible to receive up to six months of retroactive survivor benefits. Clients we work with are often surprised by this and receive an extra $10k to $15k as an initial lump sum by properly requesting and taking advantage of this retroactive benefit.
Like all other types of Social Security benefits, you have to proactively apply for survivor benefits, which means that you have to know that you’re eligible and you have to know exactly when to apply.
Again, though this does not happen automatically and has to be specifically requested at the time of application. Taking benefits even a month or two off your optimal time frame can result in significant losses over time.
The Bottom Line
Making the optimal Social Security claiming decision and maximizing your benefits is complicated. You should work with a Social Security advisor that is an expert in the myriad of strategies that are available to you.
Talk with a Social Security Advisor and obtain expert advice that is customized to your unique circumstances.
Whether any of the strategies above are right for you requires careful analysis as each situation is different. If you have questions and would like to schedule a Free Initial Consultation with an advisor, you can do so by clicking here.
Until next time,
Matthew Allen is the Co-Founder/CEO of Social Security Advisors and creator of the new course Maximizing Your Social Security produced in conjunction with Weiss Educational Services. Matthew has helped thousands of seniors maximize their Social Security benefits and avoid costly mistakes when filing. Matthew has been at the forefront of financial services for over a decade. In addition to co-founding Social Security Advisors, Matthew also founded The Universal Group of Companies, a private investment firm, in 2004. From 2000 to 2004, Matthew was a NYSE Market Maker with LaBranche & Co., a Fortune 500 New York Stock Exchange firm.