Americans contribute a significant portion of their lifetime earnings to Social Security, and for many, these benefits are their sole source of income throughout their retirement years. So what happens when an individual dies before or while collecting their monthly benefits? Thankfully, those entitled benefits don’t just disappear. The U.S. government has formulated a way to pay out benefits to surviving loved ones, even before their own retirement. This could amount to an important figure, especially for a widow(er) who did not work outside the home.
You may already be aware that a spouse can receive 100% of the benefit at Full Retirement Age (FRA) as a survivor (FRA is determined by year of birth; if born in 1962 or later, FRA is 67 years old). But did you know that benefits can also be paid to the surviving children? Most surviving children are eligible to receive a monthly benefit if they are under age 18 (up to 19 if they are still in high school), or any age if they were disabled before age 22. This amount may be added to the spouse’s survivor benefits, but the maximum total family benefit is limited, generally speaking, between 150% and 180% of the deceased’s benefit amount.
Divorced? As a former spouse, you may be entitled to benefits. As long as your marriage lasted 10 years or more and you do not remarry before age 60, you could get the same benefit as a widow(er). However, if you are caring for you and your former spouse’s child who is under 16 or disabled, the length-of-marriage rule does not apply. It’s also important to note that the benefits paid to a surviving divorced spouse will not affect benefits that other survivors could receive.
In order to plan an adequate cash flow analysis that incorporates survivor benefits, it’s crucial to know what percentage of survivor benefits one is eligible to receive, as this varies from situation to situation:
- Widow(er), full retirement age or older = 100% of deceased spouse’s benefit amount
- Widow(er), age 60 to full retirement age = 71% to 99%
- Disabled widow(er), age 50 through 59 = 71%
- Widow(er) at any age caring for a child under age 16 = 75%
- A child under age 18 or disabled = 75%
- Your dependent parent(s), age 62 or older:
- One surviving parent = 82%
- Two surviving parents = 75% to each parent
If you find yourself in more than one of the above categories, you will receive the higher of the two benefits.
If a spouse or parent were to die, applying for survivor benefits might not seem like a top priority, but it’s important to consider that these benefits are paid from the time of application, not the time of death. There’s no need to wait for certain documents in order to apply, as the Social Security office works on survivors’ behalf to facilitate this progress. For more information regarding Social Security survivor benefits, please visit www.socialsecurity.gov, or speak with your financial advisor today.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.