Claiming a Widow(er) Social Security Survivor Benefit Can Be a Challenge

“When to Claim a Widow/Widower Social Security Survivor Benefit Can Be a Challenge” – This week’s column presents widow/widower choices with respect to the Social Security widow/widow benefit.

The previous week’s FEDZONE column discussed how the finances of the surviving spouse of a deceased federal employee or retiree can suffer. The column presented some suggestions and actions that the surviving spouse can perform to order to minimize the monetary impact of their spouse’s death. This week’s column presents widow/widower choices with respect to the Social Security widow/widow benefit.

It is not uncommon today that with married couples, both spouses have worked a sufficient number of years in Social Security-covered employment to the extent that each spouse is entitled to claim his or her own Social Security monthly retirement benefit. With many couples, each spouse will receive more of a monthly benefit claiming his or her own monthly Social Security retirement benefit rather than claiming half of the other spouse’s monthly benefit. By each spouse claiming their monthly benefit, the couple will maximize their lifetime Social Security benefits. On the other hand, there is the option of the spousal benefit in which if one spouse’s Social Security monthly retirement benefit is significantly higher than the other spouse’s monthly retirement benefit, then the other spouse can receive 50 percent of the ‘higher earning” spouse’s benefit. In order for this to happen, the “higher earning” spouse’s monthly benefit has to be at least twice as much as the other spouse’s (the “lower earning” spouse) benefit. The following two examples illustrate:

Example 1. William, age 68, is receiving his monthly Social Security retirement benefit of $3,500. His wife, Carla, age 66, is receiving her monthly Social Security benefit of $2,100 per month. Carla is not eligible to receive half of William’s monthly Social Security retirement benefit because her monthly benefit of $2,100 is more than half of William’s monthly benefit of $3,500 (50 percent of $3,500 equals $1,750).

Example 2. Cynthia, age 67, is receiving her monthly Social Security benefit of $3,000. Her husband Peter, also age 67, has worked a limited number of years in Social Security-covered employment. His Social Security monthly benefit is $1,000. Since half of Cynthia’s Social Security monthly benefit ($1,500) is more than Peter’s own monthly benefit of $1,000, Peter is collecting on one-half of Cynthia’s Social Security monthly benefit.

Options for the Surviving Spouse When the First Spouse Dies

What happens when the first spouse dies? The result is that only one Social Security monthly retirement benefit will be paid to the surviving spouse. That monthly retirement benefit check will be equal to the higher of: (1) The deceased spouse’s Social Security monthly retirement benefit; or (2) The surviving spouse’s own monthly retirement benefit. In other words, the surviving spouse is eligible to receive only one monthly Social Security check following the death of their spouse. For some married couples who depend on retirement-type income coming from each spouse, this could cause some cash flow problems for the surviving spouse as one source of their retirement income will be gone.

The surviving spouse has to decide as to when to claim his or her Social Security monthly survivor benefit. The challenge is that if the surviving spouse is entitled to their own benefit, should they claim that benefit initially and switch to the survivor benefit later? The following example illustrates:

Example 3. Jan, age 62, is a recent widow. Her spouse Ken died in January 2022, also at age 62. Neither spouse had yet claimed Social Security retirement benefits. Jan’s Social Security monthly benefit at her full retirement age of 67 years is $1,400. If she elects to start receiving her Social Security monthly retirement benefit at age 62, the benefit will be reduced by 30 percent (age reduction penalty for starting before her full retirement age of 67), to $910 per month. Ken’s Social Security benefit at his full retirement age of 67 is $2,500. Jan can either: (1) Start receiving her benefit of $910 per month and when she reaches age 67, switch to her widow benefit of $2,500 per month; or (2) Elect to immediately receive at age 62 the widow benefit of $2,500 less the age penalty. The age penalty will be imposed because Jan is younger than her full retirement age of 67. The age penalty (to learn more about the age penalty and how it is computed, click here.) would be $2,500 less ($2,500 times 0.2034 or $508) equals $1,992. She can then elect to switch her monthly at age 70. By delaying her own Social Security benefit to age 70, she would get the maximum possible 24 percent more compared to had she started receiving her benefit starting at age 67, her full retirement age. As it turns out, with a full retirement age monthly benefit of $1,400, her monthly benefit at age 70 would be $1,776 over $200 less per month than $1,992 which is the full widow benefit. In short, Jan is better off taking the widow benefit at age 62 and not switching to her Social Security monthly benefit when she reaches her full retirement age or later.

Surviving benefit options, including widow/widower benefits, are explained on the Social Security web site here.

The following is a list of Social Security survivor benefit options for widows/widowers:

1. A surviving spouse receiving his or her own monthly Social Security retirement benefit will automatically convert to a widow/widower (survivor) benefit after the Social Security Administration receives the report of the other spouse’s death.
2. A surviving spouse who is also eligible for his or her own Social Security monthly retirement benefit but who so far has not applied for it, has an additional option. The surviving spouse can apply for his or her own retirement monthly benefit or the widow/widower (survivor) benefit now and switch to the other (higher) benefit later.
3. A surviving spouse who began receiving his or her own monthly retirement benefit less than 12 months ago may be able to withdraw his or her retirement application and apply immediately for a widow/widower survivor benefit. If that is done, then the surviving spouse can reapply later for their own monthly benefit which will be higher on average 7 to 8 percent more per year for every year the surviving spouse waits to take the benefit, until age 70.
4. Those surviving spouses who are receiving their own Social Security monthly benefit can apply for a benefit as a widow/widower only if the survivor monthly retirement benefit they would receive is more than their own monthly retirement benefit.

A surviving spouse should also be fully aware of the Social Security “earnings test” if the surviving spouse is younger than his or her full retirement age (FRA). An individual’s FRA depends on when the individual was born, as shown in the following table:

The “earnings test” is applicable for individuals younger than their FRA who are working and receiving Social Security retirement benefits – either their own benefit or a survivor benefit. For example, during 2022 an individual born between Jan. 2,1957 and Jan. 1,1961 who is working and is receiving their own Social Security monthly benefits would lose $1 in benefits for every $2 earned over $19,560. The following example illustrates:

Example 4. Arlene, age 60, was married to Nathaniel until October 2021 when Nathaniel died. At the time of Nathaniel’s death, Arlene was earning $90,000 a year. Since Arlene is age 60, she is eligible for the widow Social Security retirement benefit, equal to all of Nathaniel’s Social Security FRA annual retirement benefit of $36,000 at the time of his death. In 2022, Arlene would lose $1 in Social Security retirement benefits for every $2 she earns in salary income above $19,560. With a $90,000 salary.

$90,000 less $19,560 = $70,440 in excess earnings

$70,440/2 = $35,220 in forfeited Social Security benefits.

The $35,220 is more than Arlene’s widow benefit, equal to 71.5 percent of Nathaniel’s FRA benefit at the time of his death equal to 71.5 percent of $36,000 or $25,740. Arlene is starting the benefit at age 60 rather than at her FRA at age 67:

.715 times $36,000 equals $25,740

Versus the full $36,000 had Arlene waited to claim the Social Security widow benefit starting at her FRA of age 67.

Note that the “earnings test” no longer applies when an individual reaches his or her FRA. In Example 4, Arlene may want to claim her widow Social Security survivor benefit starting at her FRA of age 67 and delay collecting her own Social Security benefit until age 70. An individual’s own Social Security benefit grows by 8 percent per year for every year he or she postpones claiming the benefit beyond his or her FRA. These are called “delayed retirement credits” (DRCs). It is important to note that widow/widower Social Security survivor benefits do not earn any DRCs.

Former Spouses, Applying for Survivor Benefits, and Benefit Received in the Month of Death

An ex-spouse who was married for at least 10 years before divorcing and who has been divorced for at least two years is eligible for a widow/widower Social Security survivor benefit starting when the ex-spouse becomes age 60. They will lose eligibility for a former spouse’s survivor benefit if they remarry before age 60. They will not lose the former spouse’s survivor benefit if they remarry at age 60 or older.

A widow/widower or a surviving divorced spouse cannot apply online for survivor benefits. They need to apply for the benefit by contacting the Social Security Administration at 1-800-772-1213 to request an appointment.

Finally, another important piece of information for surviving spouses to know: If the deceased was receiving Social Security benefits, the surviving spouse must return the monthly benefit received for the month of death and any later months. If funds were received by direct deposit, the surviving spouse or another family member should ask the bank to return the money to the Social Security Administration. If the benefits were received by check, then the surviving spouse should not cash the checks and return the checks to the Social Security Administration as soon as possible.

Edward A. Zurndorfer is a Certified Financial Planner, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street – Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be dependable, but we do not guarantee that the foregoing material is accurate or complete. While the employees of Serving Those, Who Serve are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional

Social Security Survivor Benefit