Understanding Social Security survivor benefits

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(MoneyWatch) Recently widowed individuals are often surprised to see the Social Security benefits they'd been receiving suddenly stop. This is usually followed by a request from their local Social Security office to come in and activate their survivor benefits.

Obviously, this is not an ideal scenario. It is far preferable that both spouses learn what the survivor will collect in Social Security benefits while both are living.

The problem is that exact figures are hard to come by because there are a number of factors affecting the benefits to be received by a surviving spouse. It is possible for the survivor to collect 100 percent of her deceased husband's Social Security benefits upon his death, but this does not always take place.

There is a difference between standard spousal benefits and survivor benefits. The former may be as high as 50 percent of the benefit received by the spouse with the highest benefits, whereas the latter may be as high as 100 percent of the deceased spouse's benefits.

When a spouse dies, the benefit amount received from Social Security by the survivor will depend on three things: 1) whether the deceased spouse had begun to collect benefits prior to his death; 2) the time at which the deceased spouse first began to collect his Social Security benefits; and 3) the age of the surviving spouse when she begins to collect survivor's benefits.

Typically, both spouses begin taking benefits at full retirement age (66 for those born between 1943 and 1954). After the first spouse dies, the survivor can then collect 100 percent of the deceased spouse's benefit as long as she is also at full retirement age. The surviving spouse will not continue to receive the benefits she had previously received. Only one benefit amount will be paid, resulting in a reduction of benefits paid into the household after the death of the first spouse.

Early collection of retirement benefits

Those who access their Social Security benefits at 62 (the earliest age of eligiblity will see their monthly benefit reduced permanently by about 25 percent. Unfortunately, most surviving spouses realize only later that their benefit is also affected. A surviving spouse at full retirement age generally qualifies for 100 percent of what their deceased spouse had been receiving. So if the husband opts to access his Social Security benefits early, upon his death, the wife will collect 100 percent of his reduced benefits.

Early collection of survivor benefits

Where the surviving spouse has not yet reached full retirement age, he or she can begin to collect benefits at as early as age 60 and even as early as age 50 if disabled. However, the benefit is reduced by a small percentage for each month until the surviving spouse reaches full retirement age. This may result in a significant reduction in the monthly survivor's benefit. Assuming you live a normal life span, by claiming benefits early, you collect a smaller monthly income but you begin receiving it sooner. The concept is that since you collect benefits for a longer period of time, it should equal the total received if you waited until full retirement age. Consult the Social Security website for a chart showing how age may reduce benefits.

If a husband dies before filing for benefits, no matter his age, when the surviving spouse attains her full retirement age, she should qualify for 100 percent of the survivors benefit or her own benefit, whichever is greater.

  • Ray Martin

    View all articles by Ray Martin on CBS MoneyWatch»
    Ray Martin has been a practicing financial advisor since 1986, providing financial guidance and advice to individuals. He has appeared regularly as a contributor on the CBS Early Show, CBS NewsPath, as a columnist on CBS Moneywatch.com and on NBC-TV's morning newscast TODAY. He has also appeared on the Oprah Winfrey Show and is the author of two books.

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