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Note: you can find the first part of this discussion of Social Security Survivor Benefits at the link. Part 1 covered the basics of Survivor Benefits, and this article covers other considerations with the Survivor Benefit, including non-spouse survivor’s benefits and coordinating the Survivor Benefit with your own benefit. As mentioned in the prior articles, don’t expect to fully understand these calculations and definitions in the first run-through. Check over the other articles (Part 1 here, Spouse Benefits here and especially the further explanation of Spouse Benefits here) for more information, and post questions in the comment section if they come up.
Coordinating the Survivor Benefit With Your Own Benefit
The Survivor Benefit is exclusive of the surviving spouse’s own retirement benefit. If the surviving spouse is eligible for a retirement benefit that is greater than the Survivor Benefit, only the greater of the two will be payable.
Technically the surviving spouse can choose between the two benefits, if he or she is eligible for both at the same time. This can work to the surviving spouse’s advantage if the Survivor Benefit was taken early. By starting the Survivor Benefit early, the Surviving Spouse could wait to take his or her retirement benefit, allowing this retirement benefit to earn the delayed retirement credits up to age 70. This generally amounts to an increase in the retirement benefit of 8% for each year delayed beyond Full Retirement Age.
Here’s an example – Dick and Jane, both age 62 with retirement benefits available when they reach Full Retirement Age of $2,000 and $1,300, respectively. Neither of them has filed for Social Security retirement or Spousal Benefits. Dick has recently passed away.
If we run the calculation, we find that Dick’s current-age benefit would have been 75% of his Full Retirement Age benefit of $2,000 since he would be 62 at this date. (You can take my word for this reduction, or you could look it up on the table in the earlier article.) Then, if Jane was to apply for Survivor Benefits at this age, her benefit would be further reduced by the early filing, a 19% reduction from the table above.
So here’s the calculation for the Survivor Benefit: Dick’s Full Retirement Age Benefit is $2,000, reduced to 75%, or $1,500. That amount is then reduced by the 19% reduction factor, since Jane is filing early for Survivor Benefits, to total $1,215.
Notice that Jane’s own benefit at Full Retirement Age would be greater than this reduced Survivor Benefit – but at this point, her own benefit would be 75% of $1,300, or $975. So Jane could start taking the reduced Survivor Benefit now, and then later at Full Retirement Age she could switch over to her own retirement benefit, which would be the full $1,300 (plus Cost-of-Living Adjustments), or even later to age 70 when the delayed retirement credits would apply, making her own benefit even greater.
Survivor Benefits aren’t only for spouses. Other dependents can be eligible for Survivor Benefits as well. These dependents include children, grandchildren, and even parents, if they qualify. Just like leaving a sinking boat, children first.
The children of a deceased Social Security participant can be eligible for a Survivor Benefit of 75% of the participant’s Primary Insurance Amount or PIA (effectively the amount of benefit that the participant would receive at Full Retirement Age) if the child is under age 18. As long as the child was the dependent of the deceased participant, whether his or her own son or daughter, step-child, or grandchild, and the deceased participant provided at least half of the support for the child, this Survivor Benefit is available. The child didn’t have to live with the late parent to be eligible.
In addition, the surviving mother or father of the dependent child described above is also eligible for a Survivor Benefit at any age, equal to 75% of the Primary Insurance Amount of the deceased participant. This benefit is available until the child or children are age 16 (no age limit if the child is disabled and entitled to benefits). The only remaining qualification is that the surviving spouse and the deceased participant must have been married for at least 9 months (less if the death is accidental). A divorced spouse can receive this benefit if he or she was married to the decedent for at least 10 years.
The parents of a deceased participant may be eligible for Survivor Benefits as well, if they were considered dependents of the deceased. If the parents were receiving more than half of their support from the deceased participant and they are over age 62, they can be eligible for this benefit.
If there is only one parent surviving the participant, the Survivor Benefit is equal to 82.5% of the Primary Insurance Amount of the deceased participant. If there are two surviving parents and both are eligible, each would receive a benefit of 75% of the Primary Insurance Amount.
This benefit is exclusive to any retirement benefit that the parents may have available to them. If the parent is eligible for a retirement benefit that is greater than the Survivor Benefit, he or she (or both of them) may receive the Survivor benefit at age 62 (with no reduction) and then later switch over to the retirement benefit at Full Retirement Age or later.
Maximum Family Benefit
Each of these Survivor’s Benefits could be limited by a Maximum Family Benefit that each family unit must adhere to. Essentially there is a limit prescribed by the Social Security Administration on the amount of benefits, based upon the deceased participant’s Primary Insurance Amount (a good explanation of the Primary Insurance Amount and Full Retirement Age can be found by clicking this link). The Maximum Family Benefit ranges between 150% and 180% of the Primary Insurance Amount. Once total benefits exceed the limit, each recipient’s benefit is reduced by the same ratio down to the limit. For a detailed explanation of the Maximum Family Benefit, click the link.
So that completes our discussion of Survivor Benefits. For more information on any of these factors, click the links within the text above – and you can also find all of this information in the book A Social Security Owner’s Manual. If you have comments and questions, I invite you to leave post them below and we’ll try to work out answers for you.An IRA Owner's Manual or if you'd prefer the Kindle version (and let's face it, ALL the cool kids do!), you can find that at this Kindle version link.