Social Security rules are complicated, and occasionally I get them wrong.
For example, I had always relied on the Social Security Administration's publications that clearly stated: “If the person who died was receiving reduced benefits, we base your survivor benefit on that amount. The maximum survivor benefit amount is limited to what he or she would have received if they were still alive.”
Consequently, when a married worker claimed reduced retirement benefits at 62, I thought the surviving spouse would be limited to that same amount — 75% of the late worker's full retirement age benefit — as a survivor benefit if she were full retirement age or older at the time she collected them.
It turns out there is an exception to that rule which I recently discovered in the agency's program operations manual system. I want to thank Andy Landis, author of “Social Security: The Inside Story,” for pointing me in the right direction.
If a surviving spouse is full retirement age or older when he or she begins collecting survivor benefits, the amount is limited to the
larger of the reduced retirement benefit that the deceased worker collected, or 82.5% of the deceased worker's full retirement age benefit. The phrase “the larger of” is key.
So, assume a man is entitled to $2,000 in retirement benefits at his full retirement age of 66 but decides to claim as soon as possible at age 62. Because he claimed his benefits four years early, his retirement benefit would be reduced by 25% to $1,500, which is 75% of his full retirement age benefit, also known as his primary insurance amount, or PIA.
Assume the man dies and his surviving spouse is at least full retirement age. She would be entitled to a survivor benefit worth $1,650 — 82.5% of his PIA — because that amount is larger than the $1,500 per month retirement benefit he received.
Here are a few other facts about survivor benefits you might tuck away for future reference.
Survivor benefits are unique in that they can be collected as early as age 60 compared to the minimum age of 62 for retirement or spousal benefits.
If collected at the earliest possible age of 60, survivor benefits are worth 71.5% of the deceased worker's primary insurance amount, regardless of whether the survivor's full retirement age is 66, 67 or somewhere in between.
A disabled widow or widower can collect survivor benefits as early as age 50. They would receive 71.5% of the deceased spouse's full benefit if they collected survivor benefits any time from age 50 through 59.
And, there's another exception to the age-60 rule. You may qualify for survivor benefits as a widow/widower or surviving divorced spouse regardless of your age if you are caring for a child of the deceased worker. The child must be under age 16 and receiving Social Security benefits on the deceased parent's work record. The survivor benefit for both the caregiving parent and child is worth 75% of the deceased worker's primary insurance amount. The parent's benefit disappears when the child turns 16 and can resume as early as age 60, but early claiming reductions would apply.
Another thing to note about survivor benefits: The full retirement age (FRA) is slightly different from the full retirement age for workers and spouses. For example, while 66 is the FRA for retirement and spousal benefits for those born from 1943 through 1954, for survivor benefits it applies to birth years 1945 through 1956. And while the full retirement age for retirement and spousal benefit is 67 for those born in 1960 or later, for survivor benefits it is 1962 or later.
If you are full retirement age or older when you collect survivor benefits, you are entitled to 100% of what the deceased worker collected or was entitled to collect at time of death. If the deceased was collecting reduced retirement benefits, survivors can collect that amount or 82.5% of the deceased's full benefit, whichever is larger, as discussed above.
But if the deceased worker had postponed collecting his or her retirement benefit in order to earn delayed retirement credits worth 8% per year between full retirement age and age 70, the surviving spouse will collect 100% of those benefits — including any delayed retirement credits. The maximum delayed retirement credit is 32% for those whose FRA is 66.
Surviving divorced widows or widowers, who were married for at least 10 years and are currently unmarried, are entitled to the same benefits as if they were still married. And as long as they wait until age 60 or later to remarry, they can keep their survivor benefits.
Finally, if you are eligible for retirement benefits on your own earnings record as well survivor benefits, you can collect one benefit first and switch to the other later if it would result in a bigger benefit.
(Questions about Social Security? Find the answers in my new e-book.)
