Jonathan Peterson - Social Security For Dummies

Here’s an example of this situation in action: Beverly, a public relations executive, always earned more than Marvin, her husband, who retired from his job as a high school English teacher. When Marvin died at 66, his full retirement age, he had already started collecting a Social Security retirement benefit of $1,400 per month. Beverly, 62, was eligible for a reduced widow’s benefit of $1,134 (81 percent of $1,400, because of the reduction for Beverly’s age). Beverly collects the widow’s benefit for several years. Meanwhile, she allows her own, unclaimed retirement benefit to increase, even after she stops working. Her full retirement benefit is $2,300. That means with the reductions for early retirement, she could get $1,725 per month at 62, but she waits eight more years to stop her survivor benefit and claim a delayed retirement benefit of $2,300 × 1.32 = $3,036 at age 70. If Beverly had already started her retirement benefit at the time Marvin died, she still would have received only her retirement benefit, because her own benefit (no matter when she took it) would be larger than her potential survivor’s benefit based on Marvin’s more modest earnings. That isn’t always the case, but it is for Beverly, because her earnings were so much higher than her husband’s.

If your Social Security benefit is reduced because you started it early, the reduction lasts for the rest of your life. Here’s an example: Frankie’s husband suffered a fatal heart attack, and she has to decide when to begin collecting her widow’s benefit. She is about to turn 60, and her full retirement age is six years away. If she waits until she’s 66 to start the benefit, she’ll get $1,140 per month. But if she takes the benefit now, that amount is reduced by of 1 percent for each month she starts prior to reaching full retirement age. Here’s a look at two of her options:

Take the benefit now. Frankie is 72 months away from her full retirement age, so she’ll receive percent less per month. So, $1,140 × 28.5 percent = $324.90, which means she’ll get $1,140 – $324.90 = $815.10 per month.

Take the benefit when she’s 62. In this case, her benefit is reduced by 48 months, so she’ll get percent less per month. So, $1,140 × 19 percent = $216.60, which means she’ll get $1,140 – $216.60 = $923.40 per month.

Frankie, who has been out of the labor force for years, knows that her skills in office administration will bring in only a modest income. She also knows that the individual retirement account her husband had set up has gained little over the past several years, and that he never qualified for a pension. Even though she prefers to wait for a higher payment, Frankie decides to start her Social Security widow’s benefit as soon as possible.

The decision of whether to start receiving your survivor’s benefit early is an individual one. You need to consider your entire financial picture in order to make the choice that’s best for you. Sometimes, taking the benefit early is a necessity — just make sure that if you go this route, you’re fully aware of how much your monthly payment will be reduced.

Getting remarried can end an adult’s survivor benefits, depending on the person’s age. If the widow or widower gets remarried before age 60, benefits can be cut off. (Benefits continue for surviving children.) Widows who remarry can qualify for benefits based on their new spouse’s earnings record when they reach 62.

Divorced spouses may qualify for survivor’s benefits that are similar to those for a widow or widower if the marriage lasted at least ten years. That ten-year requirement is lifted in cases where the divorced spouse is caring for the deceased parent’s child who is under 16 or disabled. Divorced spouses also lose survivor benefits if they remarry before age 60.

Social Security survivor benefits provide critical protection for families with children. When a widow or widower is raising the deceased worker’s child, the parent’s age doesn’t matter to the SSA. Benefits may go to the surviving parent and the surviving child.

Brandon and Samantha are Baby Boomers whose old romance is rekindled on the dance floor at their 40th high school reunion. She’s divorced, and he’s widowed. Brandon, 58, has a 12-year-old son, Tyler, from his prior marriage. Samantha, 57, has no children. Brandon and Samantha waste no time getting married, and for a while, life is good. He makes $100,000 per year as a contract manager at an aerospace firm. She works part time at the mall. Three years later, Brandon is killed in a car accident. At that point, Samantha and Tyler each qualify for survivor’s benefits of about $1,570 per month. Samantha’s benefit would be about $2,090 at her full retirement age, but she can’t afford to wait. These benefits help the household stay afloat until Tyler graduates from high school and enrolls in college.

Older parents of a breadwinner potentially qualify for survivor benefits if their adult child dies. To be eligible, they must be at least 62 and must prove that they relied on the child for half of their financial support. Also, surviving parents must not be eligible for their own Social Security benefits that exceed what they might get as survivors. If two living parents both qualify, each may receive 75 percent of the deceased child’s basic benefit. If one parent survives, the amount is slightly higher: 82.5 percent.

Special rules also apply to disabled survivors, who may be eligible for benefits at a younger age than widows in good health and without dependent children. Disabled widows and widowers may begin collecting survivor benefits as early as age 50, but such payments are reduced 28.5 percent from what they would be if the beneficiary waited until full retirement age to collect.

In order for family members to get survivor’s benefits, the deceased worker must have built up credits based on his or her working record. But the rules are somewhat different than for retirement benefits. The exact requirement depends on the age of the worker. For example, workers still in their early and mid-20s may gain survivor’s protections by earning just six credits — about one and a half years of work. A 40-year-old worker needs 18 credits — less than five years of work. For a 62-year-old, the requirement is 40 credits. Special rules allow workers with young children to qualify with only six credits (see the nearby sidebar “Getting a boost from Social Security even if you haven’t worked much” for more information).

Survivor’s coverage has the same dollar requirements for earning credits as retirement does: Workers can earn up to four credits, and the credit amount, which rises over time, was set at $1,410 in 2020.

For most benefits, you need to achieve what the SSA calls fully insured status to gain full protection. But the SSA has a kind of safety net for children and parents raising children, which it calls currently insured status. This status allows you to earn certain benefits for family members even when you haven’t met the usual earnings requirements. You’re considered “currently insured” if you’ve attained at least six Social Security credits in a period of 3 years and 3 months (13 quarters), ending with death, disability, or retirement. Benefits are likely to be modest, and they’re restricted to children, as well as a spouse who is caring for a dependent child. Benefits under this status can’t go to a spouse without children or to a worker’s surviving parents.