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survivor benefits

Interaction of Survivor Benefits with Your Own Benefits

Social Security Survivor Benefits can be a critical lifeline for surviving spouses. The interaction of survivor benefits with your own benefits can be a bit confusing though. Does starting to receive one benefit affect your future amount of the other benefit? How about vice-versa? There’s a lot written about the topic in Social Security’s POMS manual, but it becomes very simple after you study it a bit. The interaction of survivor benefits with your own benefits can be played out in one of two ways: either you take your own benefit first and the survivor benefit later; or vice versa, taking the survivor benefit first followed by your own benefit. We’ll look at each of these methods and review the interaction of survivor benefits with your own benefits. Note: in our examples, we are assuming that the survivor benefit has been calculated correctly per the late spouse’s circumstances. See How […]

Social Security Survivor Benefit Coordination

If you’re a widow or widower and you are eligible for Social Security Survivor’s Benefits based on your late spouse’s record, you may have some timing decisions to make that could significantly affect your overall benefits. This is especially true if you are also eligible for Social Security benefits based on your own earnings record. Timing the receipt of benefits is, as with most all Social Security benefits, the primary factor that you can control.  If you have worked over your lifetime and you have a significant benefit based on your own earnings, it becomes even more important. The decision process is dependent upon the relative size of your own Social Security benefit as compared to the Survivor Benefit based on your late spouse’s record. Own SS Benefit Greater than Survivor Benefit  If your own benefit will be greater than the Survivor Benefit, it could be beneficial to you in […]

7 Questions About Divorcee Social Security Benefits

Included in the myriad of questions that I regularly receive from readers are questions about how a divorced person can collect benefits based upon his or her ex-spouse’s Social Security record. For a divorcee (as with many married couples) sometimes the ex’s benefits represent the lion’s share of the couple’s SS record. Because of this, many divorcees are very interested in knowing what benefits are available to them, and when. In addition, even when the divorced spouse in question is not the higher earner there are questions about benefits that can be quite difficult to find answers for.

8 Questions: Social Security Survivor Benefits

In this previous article we addressed some of the most common questions about Social Security Spousal Benefits. Keeping with the theme of developing FAQ sheets, today I’ll go through some of the most common questions about Social Security Survivor Benefits. Survivor Benefits are available when a Social Security recipient passes away and leaves surviving dependents – spouse, children, and other dependent family members.

Windfall Elimination Provision May Impact Spousal Benefits but not Survivor Benefits

When your Social Security retirement benefit is subject to the Windfall Elimination Provision (WEP), you’re likely painfully aware of the reduction to your own benefit by this provision. What you may not be aware of is that the effect goes beyond your own benefit – your spouse’s and other dependents’ benefits are also impacted by this provision. However, the impact of WEP does not continue after your death. 

Survivor Benefits Do Not Affect Your Own Benefits (and vice versa)

I’ve had a few questions about this topic over the past several weeks, so I thought I’d run through a few examples and explain it. When you have access to a Social Security Survivor Benefit and a Social Security retirement benefit, you can maximize your lifetime benefits by coordinating the two and planning out your strategy for taking each benefit. As we’ve covered in other articles, it often is best to delay receiving your own benefit as long as possible.  This is because you will receive Delayed Retirement Credits (DRCs) for every month after you’ve reached your Full Retirement Age (FRA, which is age 66 if you were born between 1943 and 1954, and increasing gradually up to age 67 if you were born in 1955 or later).  This DRC amounts to 8% per year, or 2/3% per month. In addition, it can be beneficial to delay receiving a Survivor […]

Social Security Filing Strategies for Surviving Spouses

There are a couple of strategies for Social Security filing that surviving spouses can use to maximize benefits throughout their lifetimes.  The important factor to keep in mind for the surviving spouse is that filing for Survivor Benefits (based on your late spouse’s record) has no impact on filing for Social Security benefits based on your own record – other than the fact that you cannot file for both benefits at the same time. Coordinating these two benefits (Surviving Spouse benefits and your own benefits) can take a couple of different paths: you could file for the Surviving Spouse benefit first, allowing your own benefit to accrue Delay Credits up to as late as age 70; or you could file for your own benefit first, and then later file for the Surviving Spouse benefit. Sue’s husband Steve passed away when Sue was 61 years of age.  Steve had just turned […]

Important Ages for Social Security

There are many specific important ages to know as you’re planning your Social Security filing strategy. The ages can become quite confusing and jumbled together as you plan.  It’s important to know at what age you can take specific actions, as well as what the consequences can be if you take a particular action earlier than it is appropriate. These ages are pervasive throughout this blog and my book, but I hadn’t compiled all of the important ages into a single place, so listed below are what I have determined to be the most important ages with regard to Social Security, as well as what is important about that age.  Enjoy! Age Description 22-62 This is the forty years during which your monthly earnings are compiled to develop your initial Average Indexed Monthly Earnings (AIME).  This figure is then used to determine your Primary Insurance Amount (PIA) which is used […]

How is the Social Security Survivor Benefit Calculated?

This is one of those very complicated and difficult to understand areas of the Social Security universe, but it’s very important to know what amount of benefits a surviving spouse will be eligible for upon the passing of his or her spouse. There are different rules that apply, depending upon whether or not the late spouse was already receiving benefits based on his or her own record, as well as the age of the surviving spouse when he or she begins receiving survivor benefits. We’ll look at the easy one first: when the late or decedent spouse was not already receiving benefits based on his or her own record. When The Decedent Spouse Was Not Receiving Benefits In the case where the late spouse had not already begun to receive benefits based upon his or her own record, there are three factors that you need to take into account:  the […]

Why It Can Be So Important to Delay Social Security Benefits

It seems like every time I write an article about Social Security benefits that includes a recommendation to delay benefits, I get a lot of responses from well-meaning folks who disagree, sometimes vehemently, with the conclusions. There are several points of view that I see in the responses, all believing that you should start taking benefits as soon as you’re eligible: you never know how long you’re going to live; Social Security is going broke, we all know it; IT’S MINE, DADGUMMIT, THEY OWE IT TO ME; and it’s all part of a huge conspiracy; among other reasons too numerous to mention. Believe me, I have no reason to recommend that people do something that isn’t in their best interests.  As a financial planner, my job is to help folks do things that are in their best financial interests all the time.  Sometimes those things that I recommend run counter […]

Important Factors When Planning Social Security for Couples

Planning for Social Security benefits for a couple can be complicated.  There are many factors to consider, including the amount of benefits each member of the couple is entitled to at various ages, as well as the relative ages of the spouses to one another.  Other factors include whether or not one member of the couple (or both) will earn wages past age 62, as well as longevity: the potential of the couple (at least one member) living past normal life expectancy. Longevity is one of the most important factors to consider – and for a couple this isn’t as straightforward as it is for one person.  According to the National Association of Insurance Commissioners’ Annuity 2000 table, a couple who are both age 50 stand a 50% chance of one member living to at least 91 years of age.  For another example, if the husband is 62 and the […]

The Social Security Survivor Benefit – Part 1

Image via Wikipedia In a previous article we reviewed the very confusing  Social Security Spousal Benefit.  That article raised a lot of questions from readers about another confusing provision of the Social Security system: the Survivor Benefit. As with all of these discussions, don’t expect to immediately understand it – this stuff is complicated, and even the Social Security staff often have difficulty explaining it.  Read through this carefully, see the referenced articles for background, and then re-read as needed.  And ask questions if you have them. The Survivor Benefit is not related to the Spousal Benefit, although certain portions of the article with further explanations of the Spousal Benefit will be useful to review as we discuss the Survivor Benefit. To start with, there are two benefits available to the spouse of a deceased Social Security participant.  The first is a small death benefit, amounting to $255 in a […]

Should I Use IRA Funds or Social Security at Age 62?

Image via Wikipedia Folks who have retired or are preparing to retire before the Social Security Full Retirement Age (FRA) face a dilemma if they have IRA assets available.  Specifically, is it better to take an income from the IRA account during the years prior to FRA (or age 70) in order to receive a larger Social Security benefit; or should they preserve IRA assets by taking the reduced Social Security benefits at age 62? At face value, given the nature of IRA assets, it seems like the best method would be to preserve the IRA’s tax-deferral on those assets, even though it means that your Social Security benefit will be reduced. If you look at the taxation of Social Security benefits though, you might discover that delaying receipt of your Social Security will provide a much more tax effective income later in life.  In the tables below I’ll work […]

How Survivor Benefits are Treated

Image by mayakamina via Flickr Social Security Survivor Benefits are much different from Spousal Benefits in several ways.  In fact, there’s very little to compare between the two.  Here are the primary things that you need to know about Survivor Benefits: Survivor Benefits can be claimed as early as age 60.  Of course, as with all early claims for benefits, the amount will be reduced if you claim earlier than Full Retirement Age (FRA). At age 60 your Survivor Benefit would be reduced to 71.5% of your late spouse’s benefit amount (or PIA if he or she wasn’t at FRA). Survivor Benefits are based upon 100% of the amount of benefit (at your FRA) that the deceased spouse was or should be receiving, whereas Spousal Benefits are based upon the PIA, and then only at a 50% maximum rate. Survivor Benefits can also be applied for separately from your own […]

A File and Suspend Review

Note: with the passage of the Bipartisan Budget Act of 2015 into law, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article The Death of File & Suspend and Restricted Application for more details. I get a lot (a LOT) of questions about the File and Suspend tactic for Social Security benefits, so I thought some more review would help.  For the uninitiated, File and Suspend is a tactic that married couples can use to help maximize their total Social Security benefits.  In this post I’ll try to cover some of the more common questions. File and Suspend works like this: One of the two in the couple can file an application for Social Security benefits and then immediately suspend in order […]

Social Security Eligibility

In order to be eligible to receive Social Security benefits – retirement, disability, or survivor benefits – a worker must earn eligibility to receive the benefits.  The general rule of thumb is that for full benefits, the worker must earn at least 40 quarters of credit within the system. Social Security Credit Generally speaking, a quarter of Social Security credit is earned for each $1,120 earned (in 2010 or 2011).  This amount is generally indexed each year – for example, the amount of earnings for a credit in 2009 was $1,090.  So if a worker earns at least $4,480 in 2011, four quarters of credit are earned with the Social Security system. Minimum Credits If you become disabled before age 62, disability benefits may be available to you if you have at least six quarters of credits earned.  Of course, these benefits will be reduced from the maximum, based upon […]

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