Seniors should understand survivor benefits

The coronavirus pandemic spreading across the United States has put the elderly in our population at the greatest risk. There will be many new widows and widowers, and it is important that they understand their Social Security options.

Widows and widowers are eligible for Social Security survivor benefits as early as age 60. At 60, they are eligible for 71.5% of their deceased spouse's full benefit amount. (The full benefit amount includes benefits the spouse was receiving if he/she postponed filing for benefits after their full retirement age.)

At full retirement age, a surviving spouse is entitled to 100% of their deceased spouse's full benefit amount. If the deceased worker had applied for Social Security benefits prior to his/her full retirement age, then the widow would be entitled to receive the larger between what the deceased worker collected or 82.5% of the worker's full-retirement-age benefit.

If the widow(er) is currently receiving a benefit based on his/her work record or is receiving a spousal benefit, he/she is entitled to choose between that benefit and a survivor benefit, whichever amount is higher.

The requirements are that the surviving spouse must be currently unmarried or have remarried after age 60. The marriage to the deceased worker had to be for at least 9 months at the time of death.

If you were divorced after 10 years of marriage, as a divorced spouse you are entitled to the same survivor benefit as long as you are single or remarried after age 60. Accordingly, you may be entitled to more survivor benefits as a divorced spouse than you are entitled to if your current spouse dies. It does not matter whether your ex is remarried or not.

It is very important for you to understand that filing for a survivor benefit is independent from filing for benefits based on your work record. This means that, even if you file for a survivor benefit, you can postpone filing for your own work benefit and allow that benefit to increase by waiting until age 70 to file.

When you file for Social Security based on your work record, you will receive whichever amount is greater: your survivor benefit or the benefit based on your work record.

It is also important to understand that anyone who collects any form of Social Security benefit — retirement, spousal or survivor — is subject to earnings restrictions before full retirement age. In 2020, you will lose $1 in Social Security benefits for every $2 you earn over $18,240. In the year you reach your full retirement age, the penalty is reduced; you can earn up to $48,600 without any loss in Social Security benefits.

Earnings over $48,600 will reduce benefits by $1 for every $3 earned over that limit. Eventually you will receive back from Social Security the lost benefits after you reach your full retirement age, but you will receive those benefits back gradually, not in one lump-sum.

As you can tell from the prior discussion, decisions as to when, or if, you should apply for survivor benefits or benefits based on your work record can be complex. You should not be making these decisions without a full understanding of what your benefits, both as a surviving spouse and based your work record, would amount to now and at full retirement age, as well as what your work benefit would be if you deferred filing for it until age 70.

Don't hesitate to review all your options with a Social Security representative. If your situation is complex, consider reviewing your options with a financial planner who has a full understanding of Social Security benefits. The wrong decision can cost you thousands of dollars.

Elliot Raphaelson welcomes your questions and comments at raphelliot@gmail.com.