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Seems like there is always something to learn. No matter how much you know and study a subject, it seems there are always factors that are uncovered that you weren’t aware of – and I find this sort of thing from time to time. Recently, I have been made aware of a couple of factors that I had misunderstood previously about Social Security Survivor Benefits – thanks to my friend Dana Anspach, who blogs over at MoneyOver55.About.com. Thanks Dana!
Limit on Reductions to Survivor Benefits
The first factor is one that I wasn’t even aware of – regarding how reductions on Survivor Benefits work in a very specific situation. The situation is when the deceased spouse was not at least at Full Retirement Age and he or she was receiving retirement benefits as of the date of death.
In this situation, the amount of benefit that is used to begin the calculation for Survivor Benefits is the greater of
- The deceased spouse’s actual benefit; or
- 82.5% of the deceased spouse’s PIA
As such, in this particular set of circumstances, the starting point for determining Survivor Benefits cannot be less than 82.5% of the deceased spouse’s PIA.
Amount of Survivor Benefit Available
The second factor that I wasn’t clear about is where the deceased spouse was, again, not at least at Full Retirement Age (FRA) but in this case he or she was NOT currently receiving retirement benefits as of the date of death.
The part that needs to be clarified is that the deceased spouse’s age isn’t a factor in determining the amount for the base factor unless he or she would now be older than FRA had he or she survived to the date that the widow(er) applies for Survivor Benefits.
In other words, when the deceased spouse was not receiving retirement benefits and he or she would not have attained FRA by this date, the Survivor Benefit is calculated based on 100% of the PIA of the deceased spouse. The Survivor Benefit is not reduced based upon the deemed attained age of the decedent.
On the other hand, if the deceased spouse was at least FRA or older than FRA as of the date of death and not receiving benefits, the Survivor Benefit amount will be based upon the decedent’s PIA plus the applicable credits for delay beyond FRA. The Delayed Retirement Credits are accrued up to the month of death.
In either case, the age of the surviving spouse is a factor – if the surviving spouse is less than his or her own Full Retirement Age (FRA), reductions will be applied to the starting factor mentioned above, based upon the age of the surviving spouse.
Corrections Applied
I’ve gone back through previous articles to update any language that was contrary to these additional factors, but I may have missed some – let me know if you find any others. Hopefully this hasn’t caused any major difficulties for you.
Sterling Raskie, MSFS, CFP®, ChFC®
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And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.
Hi Jim,
Thank you for taking the time to check with SSA directly and for reporting back to us. I quite appreciate that.
Hi Jim,
My understanding regarding Ken’s question is that one cannot earn delayed retirement credits after death. In other words, my understanding is that if Spouse A dies at or before FRA, the most that Spouse B could collect as a survivor benefit is Spouse A’s primary insurance amount.
For example, 404.338 of the Code of Federal Regulations states that survivor benefits are equal to the deceased spouse’s PIA, plus any DRC’s that he/she earned.
Then in 404.313 it talks about how DRCs are earned. It says, “You earn a credit for each month for which you are fully insured and eligible but do not receive an old-age benefit either because you do not apply for benefits or because you elect to voluntarily suspend your benefits to earn DRCs.”
My understanding is that it’s not possible to be “eligible” for an old-age benefit after death.
Later, the same section states, “If you earn delayed retirement credits during your lifetime, we will compute benefits for your surviving spouse or surviving divorced spouse based on your regular primary insurance amount plus the amount of those delayed retirement credits.” (emphasis mine)
Of course, I keep using the words “my understanding” because I’m not 100% certain about this, and I have a great deal of confidence in and respect for your knowledge of the subject.
Hi Mike –
I agree it’s hard to be 100% certain on this fact. I will follow up with my contacts at SSA to confirm, but here’s where I get my information:
In POMS section RS 00615.301 (http://policy.ssa.gov/poms.nsf/lnx/0300615301) is the reference in section A.3 of the Widow(er)s benefit is equal to 100 percent of the largest of the following PIAs:
– Death PIA
– Deemed Life PIA (Including DRCs – RS 00615.702 and any RR recomputation.
– Widow(er)’s Indexing Original Benefit (RS 00615.302).
And the POMS reference RS 00615.702 says that (section B.1):
The DRCs will be added to the widow(er) benefit if:
– NH was entitled to RIB and MBA was increased by DRCs or
– NH would have been entitled to RIB and MBA would have been increased by DRCs.
So what’s not clear is if DRCs can be earned after death. Thanks for pointing this out to me and I’ll get it confirmed.
jb
Hi Mike –
You were right. I just confirmed with my sources at SSA: when the spouse dies, DRCs stop accruing as of the month of death.
Thanks again for pointing out my error! I’ll update the article to include the proper information.
jb
Still not clear.
If the “first to go spouse” is not collecting retirement benefits and dies sometime past FRA, is the survivor’s benefit based on the benefit the “first to go” spouse would have been collecting had they continued delaying benefits until the date the surviving spouse applies for survivor’s benefits?
This implies that the surviving spouse can increase the survivors benefit by delaying the survivors claim until the deceased spouse’s 70th birthday, regardless of the date of death.
Ken,
I have confirmed with my sources at SSA that I was incorrect on that fact: DRCs stop accruing as of the date of death of the spouse that dies.
Sorry for any confusion on this matter.
jb