Ask Liz Weston

Get smart with your money

Social Security

Q&A: Lost retirement accounts are a growing problem. How to track down yours

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Dear Liz: I applied for and received Social Security widow’s benefits from my deceased ex-husband. Social Security notified me that my ex-husband had a profit-sharing plan that could have beneficiary money. I have tried to find out the correct people to talk to, but the original employer has changed hands a few times. I spoke to the financial services company that handles retirement plans for the current iteration, but they had no record of my ex-husband’s account. Do you have any ideas of people to talk to [in order to] find out if there is a beneficiary for his account?

Answer: Lost retirement accounts are unfortunately a common issue. Financial services company Capitalize estimated in 2021 that 24.3 million 401(k) accounts, with an average balance of $55,400, had been left behind by job changers, with the total rising year after year. Leaving an account with a former employer isn’t a guarantee the money will be forgotten, but it does increase the odds. Most people are better off rolling an old account into a new employer’s plan or an IRA.

There’s no national database for unclaimed retirement accounts, but there are a few places you can look. Companies with employee retirement plans are required to file a Form 5500 annually with the IRS, and these forms have contact information that may be helpful. You can try searching the U.S. Department of Labor’s site for the forms at efast.dol.gov. Another option is creating a free account at FreeErisa, which may help you find older plans. The Department of Labor also has an abandoned plan database at askebsa.dol.gov/AbandonedPlanSearch.

Your next step might be checking the National Registry of Unclaimed Retirement Benefits at unclaimedretirementbenefits.com. This database is run by a company that processes retirement plan distributions. Another place to try is the National Assn. of Unclaimed Property Administrators’ database at unclaimed.org.

Q&A: Why delaying Social Security might be the ultimate gift for your spouse

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Dear Liz: My husband is 75 and started Social Security at 62. I am 68 and started Social Security at my full retirement age of 66. My Social Security benefit is the higher of the two. My financial planner says the rules on survivorship have changed. She believes that if I die first, while my husband can still claim my benefit, it will be reduced since he took benefits early. I have not heard of this before. Is this true?

Answer: No. His early start won’t affect his survivor benefit should you die first, because you were the higher earner. Had he been the higher earner, though, his early start could have penalized you.

It’s the higher earner’s benefit that determines what the survivor gets. When one of you dies, the smaller of your two benefits goes away. The survivor gets the larger of the two checks instead.

Obviously, losing a benefit can mean a significant drop in income. A larger survivor benefit can really help the remaining spouse make ends meet. That’s why it’s so important for the higher earner to delay filing if possible.

Your husband accepted a permanently reduced benefit when he applied for Social Security at 62. You got your full, unreduced benefit by waiting for your full retirement age. If you’d put off your application a bit longer, though, you could have received “delayed retirement credits” that would have boosted your check — and the eventual survivor benefit — by 8% each year until your benefit maxed out at age 70.

Abundant research has shown that most people are better off delaying Social Security if they can. In a November 2022 study for the National Bureau of Economic Research, three economists found that virtually all American workers ages 45 to 62 should wait beyond age 65 to collect and more than 90% should wait till age 70.

One of the three economists, Laurence J. Kotlikoff, has also written a book for the general public about Social Security claiming strategies, “Get What’s Yours: The Secrets to Maxing Out Your Social Security.” Make sure to get the updated version because Congress changed some claiming strategies in 2015 (but not the ones that affect survivor benefits).

You might consider getting a copy for your advisor, or at least sending her a link, because she definitely needs to strengthen her knowledge of this vital program for retirees.

Q&A: Survivor Social Security benefit

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Dear Liz: When you discuss a survivor receiving 50% of their spouse’s Social Security benefit, are you basing the 50% on gross or net income?

Answer: The survivor benefit is up to 100% of what the deceased spouse or ex-spouse was receiving from Social Security, before taxes. If the spouse or ex starts Social Security early, that reduces the potential survivor benefit. If the spouse or ex delays Social Security beyond full retirement age, that can increase the benefit.

Spousal benefits, by contrast, are paid when the spouse or ex is still alive. Spousal benefits can be up to 50% of what the spouse or ex would receive at full retirement age.

Q&A: Checking survivor benefit eligibility

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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

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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

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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.