Unfortunately, death is a part of life. Beyond the emotional aspects of losing a spouse, there are financial considerations as well. When it comes to Social Security benefits, there are rules you should understand as you transition from married to single status after your spouse passes.
We have three learning objectives for this post:
- To understand how your Social Security benefits will change when your spouse dies.
- To recognize how re-marrying may impact your Survivors benefit.
- To learn how Social Security claiming decisions while you are both alive will impact the surviving spouses benefit level.
Additional resources to learn more about the Social Security survivors benefit can be found at the sites linked below:
The Social Security Administration uses the term “Survivors Benefit” to describe the benefit paid to the surviving spouse. Survivors benefits can also be paid to minor children, or older disabled individuals, but our focus here is on surviving spouses. All rules in the Social Security system are agnostic when it comes to gender. It doesn’t matter which spouse dies first, the rules are applied in the same way. There are always exceptions, but in general men tend to be older in the relationship and have shorter life expectancies. In the majority of marriages, the woman ends up being the surviving spouse. Since women often have time away from the workforce to raise children or care for aging parents, the woman’s benefit may be smaller than her deceased spouse based on the work history calculation.
In these cases, the woman will receive the higher of either her own or her husband’s benefit. It is important to note that you are only able to receive one benefit. If you receive the survivors benefit because it is higher than your own, you then lose your own benefit. The result is that when the first spouse dies there is a loss of household income. Depending on the difference between the two benefits the married couple was receiving, the reduction in income could be substantial.
You can collect a Social Security Survivors benefit as early as age 60, but the benefit will be reduced proportionally depending on how far in advance of full retirement age you start the benefit. Full retirement age is age 66 for those born before 1954. For those born between 1954 and 1959, full retirement age is between age 66 and 67. For those born in 1960 or later full retirement age is 67. There is no reason to wait past full retirement age to start a survivors benefit, as there are no delayed filing credits applied to the survivors benefit.
Remarrying before age 60 (or 50 if disabled) precludes you from collecting a survivors benefit based on your first spouse’s work record unless the second marriage subsequently ends through death or divorce. Remarrying after age 60 does not affect your survivors benefit from your first marriage.
For women likely to end up with their deceased husband’s benefit amount, maximizing that benefit can be an important factor in their retirement income plan. On the assumption that the male is older in the relationship and has the shorter life expectancy, maximizing the male’s benefit is generally a good decision. This means the husband should consider delaying filing for his benefit until full retirement age or as far out as age 70 to earn the delayed filing credits. Remember, it is this larger benefit that the wife will end up with at some point and loose her own benefit when she starts the survivors benefit, so maximizing this larger benefit makes sense.
We recommend not making these decisions based on a guess. While life expectancy is rarely known in an exact sense, using family and personal health history is the best way to make these decisions. At Integra Capital Advisors, we utilized a software tool to analyze various scenarios to help our clients make a wise Social Security claiming decision. Visit www.integracapitaladvisors.com to schedule a conversation on how we can help and download our free Social Security Guide to learn more about Social Security concepts.