Dear Rusty: My husband passed away in 2013 just a few days short of his 63rd birthday. I was 56 at the time and when I went into the Social Security office to notify them of his death I was told I would be able to get a partial draw when I turned 60. Two years after that I was told that I would never draw anything from his account as the rules had been changed, and since he had never drawn Social Security that his benefits were eliminated. I am 62 and intend to keep working but any information you have might be helpful. Signed: Confused Survivor
Dear Confused Survivor: You’ve certainly been given some conflicting information, so I’ll try to clarify. If your husband had accumulated enough quarter credits to be eligible for Social Security, you are eligible for a survivor benefit even if your husband was not yet collecting Social Security (SS) benefits when he passed. To be eligible for SS, your husband would have needed to work for about 10 years for an employer which participated in Social Security program (meaning, both your husband and his employer paid SS FICA payroll taxes on his earnings). Most U.S. employers participate in the Social Security program. However, if your husband worked his entire career as an employee of a state or local government which does not participate in SS, or if he worked for the Federal government under their “CSRS” program, or if he worked for any other entity which didn’t participate in Social Security, he may not have had enough SS credits to be eligible. But if he contributed to Social Security for at least 10 years and had at least 40 credits (can earn 4 per year) then he would have been eligible for SS, and you would be eligible for a survivor benefit from his record.
The rules haven’t changed for any of this. If your husband was at least eligible for SS (not necessarily collecting), you became eligible for a survivor benefit at age 60 although it would have been reduced by about 28.5% from what you would get at your full retirement age (FRA). You are still eligible for the survivor benefit but, if you take it now at age 62, it will still be reduced for claiming before your FRA, and since you are still working you’ll also be subject to Social Security’s earnings limit ($17,640 for 2019). If you exceed the earnings limit, SS will withhold from future benefits $1 for every $2 you are over the limit, which would mean you wouldn’t get benefits for some months until they recover what is due. If your current earnings are high, it may not be prudent to claim early SS benefits even if you’re entitled to them. The earnings limit changes annually, is considerably higher (by 2.5 times) in the year you reach your FRA and goes away once your reach your full retirement age.
For your awareness, the survivor benefit reaches the maximum amount when you reach your full retirement age (but is reduced if you claim it earlier). You have the option to restrict your claim to survivor benefits only, and you may want to do this if your own SS benefit from your lifetime earnings record will be more at age 70 than your survivor benefit will be at your FRA. Your goal should be to collect the highest benefit possible for the rest of your life. If you so choose, you can collect your survivor benefit first and delay your own SS benefit past your full retirement age, which would allow you to earn delayed retirement credits on your own benefit. That will increase it by 8% per year of delay, up to age 70 when your maximum Social Security retirement benefit will be reached, and at that time you would switch to the higher benefit.
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at [email protected].
My thanks to Rusty who has done a good job in explaining a complicated and perhaps one of the least well understood topics of personal finance: the SS survivor benefit. Let me make a couple of small additions to this, having retired as a Certified Financial Planner and having worked with hundreds of Social Security benefit issues.
If age 56 when spouse died, you would be eligible to begin the survivorship benefit as early as age 60 if you have not remarried. If you did remarry your new spouse would take the place of your deceased spouse in terms of Social Security benefits.
Unlike the spousal benefit while married and alive, the survivorship benefit runs parallel to your own benefit. That is, you can take one while the other continues to grow (or the penalty for beginning early continues to decline) and then switch to the other at a later date. This gives the survivor much more flexibility on which benefit to take and when….but it also makes it much more complicated.
My suggestion to ‘Confused Survivor’ is to seek the services of a fee-only CFP through the Garrett Financial Planning Network. These individuals are well trained and will charge for their services by the hour. The CFP you hire will run a financial comparison of the survivor benefits versus your own benefit and if and when it would be optimal to switch from one to the other based on your household income need. This advice may cost a few hundred bucks, but it will almost certainly be worth it over the rest of your life.