Helping your clients understand survivors benefits 

Eventually, your clients will need to discuss how their assets will be divided and distributed when the grim reaper comes knocking. You could say that this is what makes the least pleasant among all the aspects of financial planning, or more specifically, estate planning.  

But as unpleasant as it is, this aspect of estate planning is both inevitable and necessary. One dimension of estate planning is making sure that the survivor benefits are passed on to the right heirs or beneficiaries, like the decedent’s surviving spouse and family members. It’s crucial also that you are aware of the different sets of rules for survivorship benefits for workers, the self-employed, military vets, and government employees. That’s why, in this article, InvestmentNews seeks to provide the answers to some of the crucial questions about survivors’ benefits.  

So, what are survivors’ benefits? Who qualifies for survivors’ benefits? How long do survivors’ benefits last? We’ll find answers to these and more, so let’s get into it.  

Understanding survivors’ benefits 

What are survivors’ benefits? These are monthly payments given to eligible family members of a deceased worker. The benefits are from their deceased relative who, while living, worked and paid Social Security taxes before they died. 

Social Security Administration survivors’ benefits 

Workers generally receive social security benefits if they have a social security number. They must work a certain number of years to be eligible for social security benefits and survivorship benefits.  

The number of years you work earns you a certain number of credits. These credits are crucial to becoming eligible for social security benefits. The exact number of credits you need for your family members to receive survivors’ benefits depends on your age upon death. The younger you are, the fewer credits you will need. Most people would have to work and pay social security taxes for ten consecutive years to accumulate the needed amount.  

But if you have a surviving spouse and children after you die, you will only have to have earned a minimum of six credits, which is typically the equivalent of working for 1.5 years within the three calendar years of the day you died.  

How much can your family receive in survivorship benefits?  

The SSA calculates the benefits paid on the earnings of the person who died. The more they paid into Social Security, the greater their benefits. The SSA uses the deceased worker’s basic benefit amount to calculate the percentage their surviving family members can receive.  

The percentage depends on the survivor’s age and relationship to the worker. If the deceased worker was getting reduced benefits, the SSA will base the survivors’ or spouse’s benefits on that amount. In most claims for benefits, these are the rules:  

• surviving spouse, at full retirement age or older, receives 100% of the worker’s basic benefit amount 
• surviving spouse, aged 60 or older but not yet in full retirement age, receives between 71% and 99% of the worker’s basic benefit amount 
• surviving spouse, any age, with a child younger than age 16, gets 75% of the worker’s benefit amount 
• the decedent’s child gets 75% of the worker’s benefit amount 

Surviving spouses with minor children can receive survivor benefits until the child turns 16, but the widow(er) benefits continue.  

Dependent children can receive survivor benefits until they turn 18, or up to age 19 if they are enrolled in an elementary or secondary school. In the case of a disabled child, they can be eligible for benefits for life.

Maximum survivors’ benefits for the family 

There’s a limit to the benefits the SSA can pay to you and other family members each month. The limit may vary between 150% and 180% of the deceased worker’s benefit amount. 

Who is eligible for survivors’ benefits?  

Family members are eligible to receive survivors’ benefits. Those who are eligible includes:  

• a widow or widower aged 60 or older (aged 50 or older if they are disabled) 
• a widow or widower of any age who has not remarried and is caring for the deceased's child (or children), who are either younger than the age of 16 or are disabled 
• an unmarried child of the deceased who is under age 18 (or up to age 19 if a full-time student in an elementary or secondary school), or 18 or older and became disabled before age 22 
• under certain conditions, a stepchild, grandchild, step-grandchild, or adopted child 
• parents, aged 62 or older, who were dependent on the deceased for at least half of their income and were receiving Social Security benefits less than that of their deceased child 
• a surviving divorced spouse, if they meet other eligibility requirements 

Your client must work for at least 1.5 years to be eligible for Social Security Benefits themselves. If they do not fulfill this requirement, then there can be no survivor benefits.  

The required amount to earn credits that ensure your client’s beneficiaries receive survivors’ benefits can vary each year. In 2024, for instance, workers receive one credit for every $1,730 they earn, up to a total of 4 credits, or $6,920 for the year.  

We are here for surviving family members when a worker dies. Learn more about survivors benefits here: https://t.co/ed8zSl0QxA pic.twitter.com/6EjJztGU9L

— Social Security (@SocialSecurity) February 21, 2024

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How does the SSA credit system work?  

In 1978, the Social Security Administration set the rules for earning credits for survivors’ benefits. They ruled that workers can earn up to a maximum of four credits per year. Also, no one needs nor can earn more than a maximum of 40 credits in their lifetime to have benefits paid out to them.  

These credits may be earned based on a worker’s total wages or on income for those who are self-employed. Depending on what the SSA sets as the dollar equivalent for each credit, your client may need to work all year to earn the 4-credit-per-year maximum or with enough money, get all 4 credits sooner.  

During your client’s lifetime, it’s possible that they can earn more credits than the minimum number needed to be eligible for benefits. These excess credits cannot increase their benefit amount. Also, the average earnings during their productive years, and not the total credits they earn, determine the amount of their monthly payment when they reach full retirement age. 

How many credits do you need to earn to be eligible for retirement benefits?  

According to the SSA, a worker needs to earn a maximum of 40 credits to be eligible for retirement benefits.  

Number of credits needed for survivors’ benefits 

The number of credits needed for your client’s family members to be eligible for social security survivors’ benefits depends on your client’s age upon their death. The younger the age at which they died, the fewer credits needed. No worker needs more than 40 credits. 

Under a special rule, the SSA can pay benefits to a worker’s children and their spouse caring for the deceased worker’s children, even if the deceased worker’s record doesn’t have the required number of credits. A worker could get benefits if they accumulated credits for 1 ½ years' worth of work, or 6 credits, in the 3 years before their death. 

If a worker was receiving retirement benefits or disability benefits at the time of their death, the SSA will pay their survivors based on that amount. The SSA does not need to determine the worker’s credits again. 

What is the death benefit?  

The death benefit is a one-time payment of $255 to the decedent’s surviving spouse or an eligible surviving child in case of a deceased spouse. Death benefits are given by the Social Security Administration as a way of caring for the deceased; this amount is meant to assist in paying for funeral expenses.  

There has been some clamor for the death benefit amount to be adjusted for inflation, since the average cost of a funeral in the US is now at around $7,848. This includes the cost of burial and viewing of the deceased during the wake. Those who choose to have a funeral and a cremation pay slightly less, paying an average of around $6,971. 

Claiming survivors’ benefits of federal employees or retirees 

Eligible survivors of a US government employee or retiree must fulfill certain requirements and submit specific documents to receive survivors’ benefits. If the decedent was still employed or a retired federal employee when they died, here’s what their surviving spouse or relatives should do:  

1. Report the death of the federal employee or retiree.  

First, the surviving spouse, relative, or legal representative must fill up an online Report of Death form. If they were a retiree, they may call the US Office of Personnel Management (OPM) Retirement Information Office at 888-767-6738 from Monday to Friday, between 7:40 am and 5:00 pm EST/EDT. While you can get the forms online, you cannot apply for survivor benefits online.  

2. Wait for the information packet from the OPM. 

After the OPM is informed of the employee’s or retiree’s death, their spouse or relatives must wait for the OPM to issue a claim number.  

In case the deceased was a federal retiree:  

The OPM will also send an information packet containing:  

• Application for Death Benefits (Standard Form 3104 for FERS, Standard Form 2800 for CSRS) with a pink return envelope 
• OFEGLI Claim for Death Benefits (form FE 6) with a blue return envelope 

If the surviving spouse or relatives have questions, or need help completing the form, they may contact the OFEGLI at 1-800-633-4542. The Customer Service Center is open Monday through Friday, 8:30 a.m. to 4:00 p.m. EST/EDT. 

In case the deceased was still a federal employee:  

If the deceased was an employee, the agency they were working for at the time of their death should provide the survivors with an information packet and work with them to provide OPM with the necessary information. 

Documents required for submission with the application for death benefits 

To facilitate a smoother and quicker application process for survivors’ benefits, the surviving spouse or relatives must include these documents with their application:  

• the proof of death showing the date and cause of death. Pending death certificates are not accepted 
• proof of termination of any marriage. This warrants a copy of the final divorce, annulment, or death certificate with the application 
• for widows or widowers, a copy of your marriage certificate is required 
• if you are a child of the deceased, a copy of your birth certificate showing both of your parents’ names is required 
• if you are the court-appointed administrator, executor or other official of the estate of the deceased, you must submit a copy of your appointment with a raised seal 

Waiting for survivors’ benefits application processing 

After submitting a complete application for survivors’ benefits to the OPM, the claim will be handled by a specialist for processing. Typically, the application will be processed in the order in which it was received.  

Keep in mind that:  

• if the benefits claim involves the death of an employee, it will be assigned to a specialist after the OPM has received the death package from the appropriate employing agency and payroll office  
• if additional information is required to process the claim, the specialist will contact the survivor(s) and/or the agency concerned. Once the specialist has all the required documents, they can process the claim 

If deemed eligible, how will survivors receive payment? 

Survivors of a federal employee or retiree can receive a one-time lump sum payment, or as a monthly benefit.  

If the survivors choose a lump-sum payment, they can receive a check or a direct deposit to their bank account.  

If they choose monthly payments, they will receive electronic funds transfers (EFTs). There are only three instances where they would issue checks:  

• if the survivor is over 90 years of age 
• if the survivor lives more than 50 miles away from the nearest ATM 
• if the survivor(s) are deemed unable to manage their finances 

Whichever payment option they choose, try to make sure that it’s the right one that will help them with their financial goals. You can also help them address the potential “retirement gap”.  

Here’s a video that explains eligibility and the potential amount your client may receive in survivors’ benefits with a bit more detail:  

Survivor benefits for veterans 

There are special rules for survivors’ benefits for those who served in the military. The Department of Veteran’s Affairs (VA) and the Office of Survivors’ Assistance (OSA) govern the benefits for the spouses and relatives of those who rendered military service. These consist mainly of healthcare benefits in the form of reimbursements of medical expenses for:  

• inpatient treatment 
• outpatient treatment  
• mental health treatment 
• prescription medication 
• skilled nursing care 
• purchasing durable medical equipment 

These medical expense reimbursements are under the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA).  

A veteran’s eligible survivor cannot be eligible for TRICARE, the medical program for civilian dependents provided for by the Department of Defense.  

These are deemed eligible for CHAMPVA benefits:  

• the spouse or child of a veteran who is deemed by the VA as permanently and completely disabled due to a service-connected disability 
• the surviving spouse or child of a veteran who died from a VA-rated disability incurred during their service or was deemed permanently and completely disabled at the time of their death 
• the surviving spouse or child of a veteran who died while on active duty and in the line of duty, not due to misconduct – but in most cases of death or disability due to misconduct, the veteran’s family members are eligible for TRICARE and not CHAMPVA 

Knowing how much and for how long your client can receive survivors’ benefits can be a complex process, since these depend on several factors. Their job, type of employer, years of service, average earnings, and how much they contributed to their social security all play a role in determining their survivors’ benefits.  

The ages of the surviving spouse and children also influence when and how much they receive. While they can seek some guidance from the local social security office, this is often limited information. As a financial advisor, you can help them secure the best outcomes when getting their benefits. This should help secure their future long after their loved one has died. 

To help you navigate the nuances of social security and retirement planning, you can always get the opinions of industry experts right here on InvestmentNews.