Social security income often comprises a majority of a retired couple’s monthly income. In fact, the SS administration estimates that social security comprises more than 90% of the total income for about one-third of recipients. Since social security income ceases when a spouse dies, the loss of a big portion of monthly income can quickly cause a financial hardship for a surviving spouse.
The government throws the surviving spouse a modest lifeline called a “survivor” benefit, a monthly payment which may help offset, but not replace, the loss of the deceased spouse’s income. Like other systems developed by the government (think tax code), calculating a survivor’s benefit can be a nightmare as it depends on a myriad of factors, including the surviving spouse’s age, whether the deceased had already begun social security, the age the deceased began social security, and many other factors.
Despite the calculation’s complexity, knowing the amount of a survivor’s benefit well in advance allows for better financial planning. With this information, you are able to more accurately project the financial impact of lousing a spouse while in retirement. If losing a spouse during retirement makes the financial outlook rather shaky, there is still time to perhaps save more, alter lifestyles, retire later, or make other adjustments for a more secure retirement.
Social Security survivor benefit
The social security survivor benefit is a monthly benefit paid by social security to help offset the current or future absence of a deceased spouse’s benefit. Here are some general rules regarding what it takes to qualify for and how to calculate a survivor’s benefit.
Eligibility requirements
The deceased worker must be fully insured (earned 40 quarters/SS credits over 10 years).
The survivor must be married for nine months before the worker dies, unless the worker died in an accident.
The survivor must be age 60 or older (50 if disabled).
If filing for a survivor benefit based on an ex-spouse’s work record, the marriage must have lasted 10 consecutive years.
Calculating the survivor benefit
Buckle up — this calculation gets complicated. First, two definitions:
Survivor percentage: a percentage from 71.5%-100% based on (1) the survivor’s age at deceased’s passing and (2) the survivor’s “survivor” full retirement age, which can differ from the survivor’s “retirement” full retirement age.
Widow(er) limit: a formula representing the lessor of (1) the deceased’s benefit at FRA, adjusted by the survivor percentage and (2) the greater of: 82.5% of the deceased’s benefit at FRA and the deceased’s benefit at death.
If the deceased claimed before passing:
If the deceased claimed before full retirement age, the survivor benefit is based on the widow(er) limit.
If the deceased claimed at or after full retirement age, the survivor gets the amount the deceased was collecting at death, which is then adjusted by the survivor percentage.
If the deceased did not claim before passing:
If the deceased passed away before full retirement age, the survivor benefit is based on the deceased’s inflation-adjusted benefit at FRA, which is then adjusted by the survivor percentage.
If the deceased passed away at or after full retirement age, the survivor benefit is based on the deceased’s inflation-adjusted benefit at FRA plus any credits, which is then adjusted by the survivor percentage.
The greater of two benefits
The surviving spouse receives the greater of (1) the calculated survivor benefit and (2) the benefit the surviving spouse would receive based on their own work record.
One more thing
A survivor benefit Is subject to the social security earnings test between the age of 60 and the survivor’s full retirement age.
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