It’s sad to say, but in the last few weeks I have had numerous conversations with people about Social Security survivor benefits. The most often asked questions are: How soon can benefits be claimed, and will I qualify? The answer to each of these questions is not cut and dry.
There are actually two types of survivor benefits. The first is a one-time death benefit in the amount of $255. This benefit can be claimed immediately. You would need to contact the Social Security Administration and provide the Social Security number and death certificate of your spouse.
The second benefit would be paid monthly and is referred to as a survivor benefit. This is based on the spouse’s earnings history. The surviving spouse and children could be eligible to receive benefits. If your spouse provided at least half of the support for his or her parents, they too may also be eligible.
You could be eligible regardless of your age if you are caring for children under the age of 16, or if they are disabled. You may also be eligible if you are 50 or older and disabled, or if you are 60 or older.
Now you’re thinking, wow, a lot of people can receive benefits each month. Yes, but there is a maximum benefit that is split among all those who are eligible. The family benefit is limited to a maximum of 150 to 180 percent of the decedent’s full benefit amount.
Determining if you should claim the benefit now or wait can be complex. Many factors are taken into account when calculating benefit options. Some of these items include the age of your spouse when they died, at what age your spouse began taking benefits, your age, if you are currently receiving benefits and when you began taking benefits.
There are also “Widow Limits” in place. If your deceased spouse began taking benefits before full retirement age, the survivor benefits can be reduced. Full retirement ages are 66 for people born between 1941 and 1954 or 67 for people born in 1960 or later.
Other facts would include:
If you are already receiving benefits, you would be eligible for the larger of either the survivor benefits, or your current benefit; you don’t get both.
If you are younger than age 60 or younger than 50 and disabled, and receive widow or widower’s benefits, and remarry, there is a chance that the benefits could stop.
One thing to keep in mind is if your deceased spouse was receiving Social Security benefits, the payment received for the month of death must be returned, and future benefits will be stopped.
If your ex-spouse dies, you may qualify for the same survival benefits. You would need to show documentation that you were married for 10 years, either younger than age 50 and disabled, or not reached age 60; you cannot have remarried.
Based on your earnings, some or all of your Social Security benefits could be taxable. If you want to receive benefits, are still working and you have not reach full retirement age, there is a limit on how much you can earn and still receive benefits.
The Social Security Administration will ask you each year to project your earnings, so they can estimate your monthly benefit. If you find your projection is higher or lower, you should notify them so an adjustment can be made to your monthly benefit.
There is a lot of planning that goes into determining when to start taking any Social Security benefits. Do your homework and contact the Social Security Administration, your tax preparer or other financial professional.
Robin Bess is a financial advisor and director of client services at Cambridge Financial Services.