Q&A: Checking survivor benefit eligibility

Dear Liz: I was widowed at 44, when my children were 10 and 12. I received Social Security benefits for myself and for them for a time. I then went back to work. I started taking Social Security at 65 even though I continued working until 70. I hear a lot about widows’ benefits and wonder whether I would be eligible. I need the funds.

Answer: Call Social Security at (800) 772-1213 and ask whether your survivor benefit, based on your husband’s work record, is greater than the benefit you’re receiving. If it is, you’ll get the larger of the two benefits, rather than both of them. If it’s not, you’ll continue to get your own benefit.

You first qualified for survivor benefits because you were caring for a deceased worker’s minor children. Your benefit probably ended when the younger child turned 16, although the children could continue receiving checks until they turned 18 or graduated from high school, whichever occurred later.

Otherwise, survivor benefits are typically available at age 60, although the amount available is reduced if you start benefits before your own full retirement age (which used to be 65 but is currently between 66 and 67). Also, benefits started before full retirement age are subject to the earnings test, which withholds $1 for every $2 earned over a certain amount ($21,240 in 2023).

When you applied for Social Security at 65, the agency may have compared the benefit you earned on your own record with the survivor benefit you were eligible for based on your late husband’s record, and given you the larger of the two. If not, ask them to make the comparison now and see if you’d be better off.

Q&A: Divorce survivors benefits and remarriage

Dear Liz: I am a divorced man receiving Social Security survivors benefits based on the earnings record of my ex, who has died. I am 63. Can I get married and continue to receive benefits?

Answer: Yes. People receiving survivors benefits can remarry at age 60 or later without losing their benefits.

Survivors benefits are based on the earnings record of a spouse or ex-spouse who has died. That’s different from spousal benefits and divorced spousal benefits, which are based on the earnings record of someone who is still alive. People receiving divorced spousal benefits can’t remarry without losing those benefits.

Q&A: Social Security rules differ for divorced spouses and divorced survivors. We explain

Dear Liz: My spouse’s parents were married for 11 years. They divorced at age 32 and my mother-in-law remarried at 42. My mother-in-law and her ex are now 82. Her husband is 93 and in poor health. When her husband dies, she does not get his pension. Her current Social Security benefit is $850 a month. Her husband receives $1,200 while my father-in-law’s benefit is $2,500 a month. She is convinced that when her current husband dies, she will be eligible for her ex-husband’s $2,500 benefit. I think that only happens when her ex dies, but she can get 50% while he is still alive. What is correct?

Answer: You’ve got it right.

People may be eligible for benefits from ex-spouses’ work records if the marriage lasted at least 10 years.

While the ex is alive, your mother-in-law could qualify for divorced spousal benefits of up to 50% of his benefit at full retirement age — but only if she is currently unmarried. If her ex dies, she might be eligible for divorced survivor benefits of up to 100% of the benefit he was receiving — but only if she is widowed or divorced. (People can receive divorced survivor benefits while married, but only if they married at 60 or later.)

She would receive benefits based on her ex’s work record only if the check is larger than her own.

The different rules for divorced spousal versus divorced survivor benefits can be complicated, so it’s not surprising that she’s confused. Let’s use the numbers you provided to make this somewhat clearer.

If she is widowed and her ex is still alive, she would get a divorced survivor benefit of $1,250, because it’s (slightly) larger than the $1,200 survivor benefit from her husband’s record. (Her own $850 benefit would essentially go away, so her household income would drop pretty dramatically from $2,050 plus the pension to $1,250.)

If her ex should subsequently die, she would be eligible for divorced survivor benefits of $2,500 (or whatever the ex was receiving at the time of his death).

There are some caveats here.

Divorced spousal benefits are based on the ex’s “primary insurance amount,” or what he would receive at his full retirement age. For someone born in 1940, that was 65 years and six months. Your mother-in-law would not be eligible for any delayed retirement credits her ex may have earned by putting off his application until after his full retirement age.

On the other hand, she wouldn’t be penalized if he started his benefit before full retirement age. The bottom line is that her divorced spousal benefit could be somewhat more or less than 50% of what he is currently receiving, depending on when he applied.

Survivor and divorced survivor benefits, on the other hand, are based on what someone was actually getting when they died. An early start can stunt those benefits whereas a later start can increase them.

That’s true of regular survivor benefits as well, and why it is so important for the higher earner in a married couple to delay filing as long as possible. The larger benefit can really help when the first spouse dies and one of the couple’s two checks ends.

Your mother-in-law’s financial prospects were made even worse by the decision to get a “single life” payout from the pension rather than a “joint and survivor” option. The joint and survivor option would have meant accepting a smaller benefit, but it would have lasted for your mother-in-law’s lifetime rather than ending at her husband’s death.

A married worker can’t choose the single life option without spousal consent, and spouses would be smart to consult a fee-only financial planner before they agree to give up a lifetime stream of income.

Q&A: When to take survivor benefits

Dear Liz: My wife started collecting Social Security at her full retirement age six years ago. I’m waiting to file to get my maximum Social Security payout at 70 in 2025. If I were to file today, my current benefit would be significantly higher than hers, and even more so if I wait. If I predecease her without filing before reaching my maximum benefit at 70, what are her options for survivor benefits? Would her new benefit amount be based on my date of death or my full retirement age, or can she delay filing until I would have turned 70 in 2025?

Answer: Your wife would receive a survivor benefit equal to whatever you had earned as of your date of death, including any delayed retirement credits. She wouldn’t increase her survivor benefit by delaying until 2025, if you die before then. On the other hand, she also wouldn’t face a reduction in the benefit for starting early, since she has already reached her own full retirement age.

You’re making the smart move by delaying because you’re maximizing both your own benefit and the sole Social Security check that one of you will receive after the other dies. But you don’t have to be married to benefit from delaying. New research by economists at Boston University and the Federal Reserve has found that virtually all American workers ages 45 to 62 should wait beyond age 65 to start Social Security and more than 90% should wait until age 70.

Q&A: Claiming divorced spousal benefits

Dear Liz: My son is 59, and his ex-wife died approximately 12 years ago. She was a nurse and paid more into Social Security than he has. Is he entitled to her Social Security benefits as indicated in your article? How does he file and get more information? Must he wait until he is 62?

Answer: If their marriage lasted at least 10 years, he could begin divorced survivor benefits as early as age 60, or age 50 if he is disabled. (He can remarry at age 60 or later and still receive survivor benefits.)

Benefits are reduced if he applies before his full retirement age, which will be 67. Also, starting before full retirement age means the benefits are subject to the earnings test that withholds $1 in benefits for every $2 earned over a certain amount, which in 2023 will be $21,240.

If he earns too much to make starting early worthwhile, he could apply for divorced survivor benefits at age 67, when the earnings test goes away. His own retirement benefit could continue to grow until age 70, and he could switch at that point if his own benefit is larger.

But he’d be smart to consult a financial planner or use a Social Security strategy site, such as Maximize My Social Security or Social Security Solutions, to craft the best approach.

He can call Social Security’s toll free number at (800) 772-1213 for more information.

Q&A: Divorce complicates retirement benefits

Dear Liz: I was told by Social Security that because I remarried at 60, I could still collect half of my ex’s benefits once he died. He has just died, and half of his benefit is greater than my own retirement benefit. My current husband has not started benefits. If I collect half of my ex’s benefit but want to later switch to collecting benefits on my current husband’s record (once he starts to collect) or to survivor benefits should he die before I do, can I do that?

Answer: The short answer is yes, although you’ve confused divorced spousal benefits with divorced survivor benefits.

While your ex was alive, you might have been eligible for a divorced spousal benefit if you had remained unmarried. That benefit would have been up to 50% of your ex’s primary insurance amount (the amount he would receive at his full retirement age).

The rules changed once your ex died. As a divorced survivor who remarried after age 60, you are entitled to up to 100% of what your ex was receiving. The survivor benefit will be reduced if you haven’t yet reached your full retirement age (which is currently between age 66 and 67).

Survivor benefits also offer more flexibility to switch later than other types of benefits. If you choose to begin receiving a surviving divorced spouse’s benefit now, you can switch to your own benefit at any point through age 70, if your benefit is higher, says William Meyer, founder of the Social Security Solutions claiming strategies site. You also can switch to receiving spousal benefits from your current spouse’s record once he starts collecting, if that benefit is greater than what you’re receiving from your former spouse’s record.

Figuring out the right way to claim can be tricky, so consider consulting an advisor or using claiming strategy software to determine what’s best in your situation.

Q&A: Filling a survivor benefit gap

Dear Liz: I am a 57-year-old widow. My children are 23, 22, 20 and 17. When my youngest graduates next June, I will lose the last of our Social Security survivor benefits. Our benefits used to be over $5,000 per month but her check is currently $2,084 per month. I am barely making it monthly now with my mortgage and other bills but will definitely not be able to afford to stay in my home once that benefit ends. I don’t know if I would be better off to rent out my home or sell it and buy a condo so my kids have a place to land. I am engaged and plan to live with my fiancé (knowing we can’t get married until I’m 60!). What are some things to consider in making this decision?

Answer: For those who aren’t aware, millions of children receive Social Security benefits because their parents are retired, disabled or deceased. The benefits typically continue until the child turns 18, or 19 if the child is still in high school. People caring for the offspring of a deceased worker also can receive benefits, but those typically end when the child turns 16.

Otherwise, survivor benefits generally are available to qualifying widows and widowers starting at age 60. Remarrying before age 60 can disqualify the survivor from benefits.

You obviously need a plan to bridge that two- or three-year gap before your widow’s benefits begin. But the best approach depends on the details of your situation.

You don’t mention how many of your children are now living at home, although it’s not unreasonable to consider how to house one or more of them in the next few years. Your youngest may want to live at home while going to college, or need a room to come back to in the summers if she goes away to school.

The others may well boomerang home even if they’re currently on their own. Kids can take longer to launch these days, especially in high-cost areas where affording even a modest apartment can be difficult.

That doesn’t mean you have to buy them their own place, of course. What you’re able to offer will depend on your resources and circumstances. You may need the money from the sale or rental of your home to bolster your retirement funds, for example, or to help pay college tuition.

Whether renting or selling is the best move also depends on your circumstances. Selling may be the better option if you can’t rent the home for more than its carrying costs. Even if you could make a profit each month, you may not want the hassles of being a landlord. A bad tenant or an unexpected vacancy could upend your finances, particularly if you don’t have considerable savings.

Also, if you rent out the home for more than a few years, you would lose the ability to exempt up to $250,000 in home sale profits when you did finally sell it. To take advantage of the exemption, you must have owned and lived in the home for at least two of the previous five years.

Consider scheduling a session with an accredited financial counselor. These advisors are fiduciaries, which means they’re required to put your best interests first, and they often work on a sliding scale. You can get referrals from the Assn. for Financial Counseling & Planning Education.

Q&A: Social Security and inflation

Dear Liz: If I wait until I am 70 to claim Social Security, my benefit will increase 8% a year. With inflation above 8%, should I take Social Security early? I am almost 68.

Answer: This question was answered in a previous column but needs to be addressed again because so many people misunderstand how Social Security cost-of-living increases work.

Social Security applies cost-of-living adjustments to your benefits whether you’re currently receiving them or not. In other words, your benefit has been receiving inflation adjustments since you turned 62, when you were first eligible.

Applying now doesn’t get you anything extra and, in fact, costs you because you’re giving up the 8% annual delayed retirement benefits you would otherwise receive.

Q&A: Can someone who has remarried claim survivor benefits from a deceased former husband?

Dear Liz: Can someone who has remarried claim survivor benefits from a deceased former husband?

Answer: Possibly, if the marriage lasted at least 10 years, the divorce occurred at least two years ago and she remarried at age 60 or later.

Divorced survivor benefits can be up to 100% of the former husband’s benefit. The amount would be reduced if the ex-wife applies before her own full retirement age, which is currently between 66 and 67. (Survivor benefits could be further reduced or even eliminated if the ex-wife receives a pension from a job that didn’t pay into Social Security, under the “government pension offset” rules.) If the ex-wife has earned a Social Security benefit of her own, she would get the larger of the two checks rather than both amounts.

The rules for divorced survivor benefits are different from those for divorced spousal benefits. Divorced spousal benefits may be available while the ex-husband is still alive, but only if the ex-wife hasn’t remarried. Also, divorced spousal benefits max out at 50% of the ex-husband’s benefit.

Q&A: Social Security’s complex rules

Dear Liz: You recently mentioned that people can’t always trust the information they get from Social Security representatives. I worked for Social Security for 25 years. When I was ready to file for spousal benefits a few years later in another town, the rep I got immediately told me I wasn’t eligible and was not even going to fill out an application. I knew he was wrong but he was adamant. Always, always tell your readers to insist on filing an application no matter what, as that protects their appeal rights. The applicant might be wrong but will receive a formal determination telling them why. I spent 20 minutes educating that rep on what he should have already known. They don’t train them like they used to.

Answer: Social Security rules can be immensely complicated and, as you note, not every Social Security representative understands those rules as well as they should.

Anyone who’s thinking of applying should first educate themselves as much as possible (the latest edition of “Social Security for Dummies” by Jonathan Peterson is an excellent place to start). Consider using Social Security claiming software or getting personalized advice from a fee-only financial planner. Once you’re well informed, you’ll be better able to recognize and avoid bad advice.