Aaron Charles Gregg

When a Spouse Dies, Does Survivor Get Their Social Security Benefits?

“When you’re gone, your spouse’s income will take a major hit–one that can be worsened significantly, if you make the wrong decision about when to claim.”

Most people don’t understand how Social Security works for themselves or their loved ones. Here’s one major misconception: you can’t file early for Social Security and then get an increased level of benefits once you’ve reached Full Retirement Age, or FRA. This is one of many common errors, according to a recent article “When You Claim Social Security Can Have Huge Implications for Your Spouse” from Kiplinger. Once you’ve started taking benefits before your FRA, your lower level is set for life.

Another common error happens when married couples don’t understand how their benefits impact each other. If your spouse depends on your Social Security benefits to pay the bills, you both need to gain an accurate understanding of how surviving spouse benefits work.

Let’s that say a couple retires and both decide to take their Social Security benefits right away. One is 66 and the other is 62. The older, Pat, receives $3,000 monthly. The younger spouse, Penny, will receive $1,900. Their total household benefit from Social Security is $4,900. If Pat dies first, Penny will lose her own benefit and receive only Pat’s $3,000 monthly benefit. If this is the only income, Penny may face some serious financial challenges.

If Pat started taking benefits earlier than his FRA, at 64 instead of 66, his monthly benefit would be $2,625. If he were to start taking benefits at 62, his Social Security benefit will be even smaller. The reductions are permanent, and they also impact a surviving spouse’s monthly benefit.

What can you do to maximize your spouse’s survivor benefit? Wait for as long as you can to claim your Social Security benefits. For every year you wait, you earn an extra 8% in delayed benefits. These increases grow until age 70, at which point your Social Security benefit reaches the maximum.

Not everyone can afford to delay their benefits. However, when possible, it makes a big difference to the surviving spouse, who is statistically likely to be the female spouse. For couples who can afford to delay benefits, couples with significant age differences and couples where one of the two has exceptionally good health or comes from a family with longevity, this is a worthwhile approach.

Delaying benefits means the loss of benefits during the years until age 70. Forgoing several thousand dollars a month may not be possible for everyone.

If your surviving spouse won’t be able to make ends meet without both Social Security benefits, there needs to be a plan to somehow bridge the gap. How this is done depends upon the individuals and their families. Every situation is different. It is not an easy situation to address. However, one thing is certain: ignoring it will not make the problem go away.

Reference: Kiplinger (April 20, 2022) “When You Claim Social Security Can Have Huge Implications for Your Spouse”

Should I Delay Claiming Social Security?

“When you begin claiming affects how much money you get from the program, and once you're receiving checks, it's difficult to undo your decision.”

Getting the timing right on Social Security is important. Deciding when to claim is a decision requiring thoughtful planning and accurate information. A recent article from York News-Times titled “3 Reasons to Put Off Social Security for Another Year and 2 Reasons Not to” takes a common-sense approach.

There are good reasons to delay taking Social Security benefits. First, if you are under 70, the longer you delay benefits, the larger your checks. Benefits grow anywhere from 5/12^th of a month to 2/3^rd of 1% per month, depending upon your Full Retirement Age (FRA) and your current age. FRA is the age when you qualify for a standard benefit, based on your work history. For most of today’s wage earners, this is sometime between age 66 and 67.

A second reason to delay: you may get a larger lifetime benefit, if you live into your mid-80s or beyond. However, those who need the income to pay bills may not have a choice, even if they have not reached their FRA. If possible, delaying by a few months might be helpful to increase benefits.

A third reason is if you are still working. If you are working and earning a decent salary and have not yet reached your FRA, you may run into problems with the Social Security Earnings Test. The federal government deducts $1 from each monthly benefit for every $2 you earn over $19,560 in 2022, if you will be younger than your FRA for the entire year. If you will reach your FRA in 2022, you will still have a deduction, but this will be $1 for every $3 you earn over $51,960. If you are still working, delaying taking benefits makes sense.

The good news: the money will not be out of your pocket forever. Once you reach FRA, your benefits are recalculated to include the amount previously withheld, making checks larger. However if you do not need benefits right away, the best decision is to delay taking Social Security until you retire.

There are also reasons why delaying taking Social Security benefits is not necessary. The biggest one is if you are 70 or older. The benefits stop growing on your 70^th birthday, so there is no reason to delay. Make sure to sign up for benefits by your 70^th birthday.

If your life expectancy is not great, then there is no incentive to waiting. If you pass away before signing up for benefits, you might not get any money from Social Security. Take an honest look at your own health and your family’s health history. If you think you might not live all that long, or if everyone in the family passes early, it may make sense to apply for Social Security, even before your FRA.

When you sign up for benefits matters a lot. The Social Security Administration has calculators on its website to use once you have created a my Social Security account. This will give you an idea of how much you can expect to receive in Social Security benefits at various ages, based on your own work history.

It also makes sense to align your estate plan and retirement plans with Social Security.

Reference: York News-Times (Jan. 27, 2022) “3 Reasons to Put Off Social Security for Another Year and 2 Reasons Not to,”

What are the Responsibilities of an Executor?

“The relationship is a trustee relationship. In other words, the executor is responsible for properly processing the property for all involved. Administrators do much the same, except that the ‘will’ conditions for distribution are set by the state.”

When you ask a loved one to serve as your executor, what exactly are you asking? Understanding the responsibilities of the role, how much work is involved and how they’ll know if they are doing things properly are all fair questions, says a recent article titled “Pre-planning–what does the executor do?” from Pennsylvania News Today.

In simplest terms, the executor (sometimes referred to as the testament executor) files the will with the court, identifies assets that pass through the will, arranges for payment of debts, makes sure the taxes are paid and manages the distribution of assets. The executor is responsible for ensuring that the directions in the will are followed. The size and complexity of the estate will determine how much work is involved and how long it will take to complete.

Funeral and burial arrangements are handled by the executor. It is best if the executor knows the decedent’s wishes, including what arrangements have been made in advance. Did the decedent want to be buried or cremated? Do they want a religious service or a simple graveside prayer? Funeral and related expenses are at the top or near the top of the list for creditors to be paid in most states.

Wishes for funeral and burial arrangements should be documented and shared with loved ones.  Wills are often not found or reviewed until days or weeks after death, when it is too late to follow the instructions. Many people use a “Letter of Intent” to share their thoughts.

Locate the will and arrange for probate. The will must be filed with the court to begin the probate process, so the will can be recorded and deemed valid. This is done in the jurisdiction where the decedent lived at the time of death. Even if all assets pass outside of the will, the will must still go through probate. In some states, this is a relatively simple and painless process. In others, it is lengthy and costly.

Work with an estate planning attorney. Unless you are experienced in this area of the law, doing it on your own is risky. Elder law and estate planning attorneys are knowledgeable about exemptions and deductions you likely aren’t aware of. They will know how to manage distributing assets among beneficiaries and head off potentially litigious situations.

Create a complete inventory of all assets, including real estate, cars, personal property, digital assets, investment accounts, retirement accounts and life insurance policies.

Contact the IRS to obtain a tax number (EIN) so you may open an estate bank account, which will pay creditors and estate expenses. Your estate planning attorney will know which debts must be paid first.

The executor should also notify Social Security and if the person was in the armed forces, the Veterans Administration to inform them of the death.

Obtain multiple originals of the death certificate, which will be needed for a number of transactions.

Reference: Pennsylvania News Today (Nov. 23, 2021) “Pre-planning–what does the executor do?”

What Happens to Social Security Payments after a Person Dies?

“The Social Security Administration should be notified as soon as possible after a beneficiary dies. Depending on your relationship to the deceased, you may be entitled to benefits for survivors.”

How does the federal government know to stop sending Social Security payments when a recipient has died? What if the surviving spouse or a dependent doesn’t know they are entitled to benefits after a loved one has died?

Tackling this issue when an older person or spouse has died can be complicated, but a helpful article from CNBC titled “Here’s what happens to Social Security payments when you die” provides important answers.

The Social Security Administration needs to be notified of the death of a benefit recipient as soon as possible. In some cases, funeral homes have a notification process, and they report the death. The person who has been named as the deceased’s executor can also call Social Security.

Whoever calls or contacts the Social Security Administration will need to know the decedent’s Social Security number.

The last month a person is eligible for Social Security benefits is the month prior to their death. Any benefit paid after the month of their death must be refunded. That’s because each payment received represents the previous month’s benefits. If a person dies in August—even if they die on August 31—July is the last month they were eligible for benefits.

If benefits are made by direct deposit, the bank needs to be notified, so it can return the benefit. Using those funds after a recipient has died is a federal crime, even if the death is not reported. If the SSA receives notice of this occurring, the agency may initiate a criminal investigation. The SSA and other government agencies coordinate their records to identify any unreported deaths.

Anyone already receiving money based on the deceased’s record will automatically convert to survivor benefits, once the SSA receives notice of the death. However, in other cases, the surviving spouse should contact SSA to apply for survivors’ benefits. This must be done by appointment in person at a local office, since it cannot be done online.

If the surviving spouse has reached full retirement age, they can get their deceased spouse’s full benefit. They can apply for reduced benefits as early as age 60 or age 50, if they are disabled. If the survivor qualifies for Social Security on their own earnings record, they can switch to their own benefit anytime between ages 62 and 70, if the benefit amount would be greater.

There is usually a one-time lump-sum death payment of $255 given to a surviving spouse or qualified child.

Reference: CNBC (Aug. 16, 2021) “Here’s what happens to Social Security payments when you die”

There are Rules for Social Security when Someone Dies

“When a loved one passes away, there are usually various arrangements that need to be made. One of the tasks to oversee will involve reporting the death to the Social Security Administration.”

Notifying Social Security about a death is one of a handful of must-do’s shortly after a loved one dies. If this task is not done promptly, says U.S. News & World Report in the recent article titled “How to Report a Death to Social Security,” then there may be problems and extra work in the future.

Here are the four steps that need to take place.

Report the death to the Social Security Administration. The funeral director might offer to do this.  However, it may be best if the family does it, so you don’t have to share the decedent’s Social Security information. You can call the SSA directly or contact the local Social Security office. This cannot be done online. It must be done on the phone. You will need the decedent’s complete date of birth and their Social Security number.

Review Social Security payments. Social Security benefits arrive the month after the month to which they apply. For example, a February benefit will arrive in March, the March benefit arrives in April, and so on. However, the day that a person dies, those benefits stop on that day. There’s no such thing as a grace period or partial payment for the month.

If the person dies during March, they won’t be eligible to get benefits for March. They will receive benefits for February, but not for March. It doesn’t matter if they die on the last day in the month or on the first day.

What if you receive a check for the month the person died? Mail the check back to the Social Security Administration. Keep the person’s bank account open, if the deposit is made directly to the account to allow the SSA to retrieve the last payment.

What about the one-time SS death benefit? Once the death has been reported, there may be a one-time death benefit of $255, sent to the surviving spouse, if they were living with the deceased. If the surviving spouse was living separately but is still eligible for benefits on the deceased’s record, the one-time payment may still be sent. If there is no surviving spouse, the death benefit can be sent to a child who is eligible for benefits based on the deceased’s record.

Arranging benefits for family members from Social Security. Depending upon the circumstances, family members may still be eligible to receive benefits. There will be paperwork. The best advice? Don’t delay, as when you apply will impact when benefits begin. Here are the family members who may be eligible for benefits after a death:

• A disabled widow or widower age 50 and older
• A widow or widower age 60 or older
• A widow or widower of any age caring for a child of the deceased under age 16, who is also disabled.
• An unmarried child of the deceased younger than 18, or 19 if they are a full-time student in elementary or secondary school
• A stepchild, grandchild, step-grandchild or adopted child in certain circumstances
• An unmarried child with a disability that began before age 22
• Parents who were dependent on the deceased for at least half of their support who are at least 62
• A surviving divorced spouse, but only in certain circumstances

The surviving spouse has several options regarding how and when to take which benefits. For instance, the surviving spouse may be able to apply for their own benefit plus a survivor’s benefit, but not at the same time. For instance, it may make sense to take a survivor’s benefit for several years and delay taking your own benefit, and then later take the surviving spouse’s own SS benefits when they are larger.

Reference: U.S. News & World Report (June 9, 2021) “How to Report a Death to Social Security”

Claiming Social Security? What You Need to Know

“You may be someone who looks forward to the day you retire, or you could be someone who plans on working for as long as possible. No matter which category you fall into, you should do some retirement planning in preparation for this major milestone.”

If you’re eligible for Social Security, those monthly benefits may be a big part of how comfortable your lifestyle is once you retire. However, making the most out of your benefits requires some knowledge and good decision making, as described in this recent article “4 Must-Knows Before Claiming Social Security” from The Motley Fool.

What’s Your Full Retirement Age—Your “FRA”? When you start taking benefits will have a big impact on the amount of your benefits. If you wait until your FRA, you’ll get your standard benefit. Born between 1943—1954? Your FRA is age 66. If you were born after 1967, your FRA is 67. If you were born between 1955 and 1959, you’ll want to check with the Social Security Administration to be 100% certain.

You become eligible to take your Social Security benefits once you turn 62. However, the benefit is reduced for every year that you take it early. Another option is to take it as late as age 70. Your benefits will grow for every year you wait. Let’s say your standard benefit would be $2,200. If you take it as early as age 62, it will be $1,650. If you wait to age 70, and it leaps to $2,900. Waiting could make the difference between paying and not paying some bills.

How Long Will You Live? This is the $20 million question. Family longevity and overall health could give you a higher probability of living a long life, but there are no sure answers. If you start taking benefits at age 62 and live to age 75, the total amount in benefits will be $257,400. If you take benefits at age 66, you’ll get $237,600. If you wait until age 70 to claim benefits and live to age 75, you’ll get $174,000.

A longer life means larger numbers. Live to age 80, you will get $365,000 if you start at age 62, $369,000 if you start at age 66, and $348,000 if you start at age 70. Live to age 85, and you will get $455,400 if you start at age 62, $501,600 by starting at age 66, and $522,000 if you wait until age 70.

How Much Have You Saved for Retirement? Social Security makes up about 40% of retirement income for the average American. If you’ve got a pension, consider yourself lucky. The more income streams, the better. If your expenses during retirement are, let’s say, $40,000 a year, and your income is $20,000, then you’ll need an additional $20,000 to keep your bills paid. Studies on investments and retirement (and there are many of these) report that if you have a traditional 60% stocks and 40% bonds investment portfolio, you risk running out of money in retirement, unless you keep withdrawals at no more than 4% of your total account value. An investment account of $500,000 that yields $20,00 annually—is a start. Most Americans do not have that much in retirement savings.

Will You Need or Want to Work During Retirement? Working during retirement is a necessity for some. for others, it’s a way to get out of the house and socialize. If you have $40,000 in expenses and receive $20,000 from guaranteed income streams, the $10,000 earnings from a part time gig could lower the amount you’d need to pull from retirement savings.

There’s a downside to working during retirement. If you work too much, Social Security will decrease your monthly payments based on your income. If you are considering taking Social Security early while working, make sure to check the numbers, so you aren’t getting hit with penalties.

Reference: The Motley Fool (June 7, 2021) “4 Must-Knows Before Claiming Social Security”

Collecting Social Security from Divorced Spouse

“It’s always smart to maximize your Social Security benefits, and if you are divorced, one way to do that might be to take them based on your ex’s earnings record. Here are some of the rules on how that works.”

Any divorce is tough, but late in life divorce presents special challenges, even as it becomes more and more common. While divorce in general is declining in America, the divorce rate among Americans aged 50 and up has nearly doubled since the 1990s, and nearly tripled (!) for those over age 65. A recent article from Kiplinger entitled “Yes, You Can Collect Social Security from an Ex-Spouse: Here’s How” contains valuable information for those considering or in the midst of a gray divorce.

Most importantly, yes, you can collect Social Security (SS) benefits based on the earnings of your ex, if you meet these requirements:

• At least 62 years old.
• Currently single.
• Were married to the ex-spouse for at least ten years.
• The benefit you would receive from your own work history is less than the benefit you’d receive from your former spouse’s work history.
• Your ex-spouse qualifies for Social Security benefits.

For all spouses, including exes, you may receive up to 50% of the amount your spouse or former spouse would receive in benefits at their full retirement age. Note that this is not in addition to your own benefit. Your benefit must also be lower than half of your ex’s benefit, in order for this rule to apply.

Let’s say your own monthly SS check would be $1,000. If the check of your ex-spouse would be $1,500, then you would not be eligible for former spousal benefits ($1,000 is more than $750, which is half of $1,500).

Timing is another factor in Social Security, for benefits from your own earnings or from an ex-spouse. Your benefits at age 62 are less than what you are eligible for at full retirement age. To get the full 50% of your ex’s benefits, you must wait until your own full retirement age. Unlike applying on your own earnings record, waiting to apply for your ex-spouse’s earnings does not increase after full retirement age.

If your ex is deceased, you may be eligible for the same survivor benefits as current spouses, which may mean you could receive the full amount of your ex’s benefits, rather than half. Your marriage must have lasted at least ten years, and the amount has to be greater than what you would receive based on your own earning records. However, there is one major difference: you can start receiving survivor benefits as early as age 60, and if you are disabled, at age 50.

When applying for benefits on an ex’s record, you’ll need to provide a fair amount of information about yourself and your work history. That includes a birth certificate, proof of citizenship, if you were not born in the U.S., military discharge papers, if you served before 1968, W-2 forms and/or self-employment tax returns, your marriage certificate and final divorce decree. Some of the documents will need to be originals.

There are a number of ways to maximize your Social Security benefits, regardless of your marital status. It’s a good idea to learn all you can about the options before you retire, so you can receive the benefits you deserve.

Reference: Kiplinger (May 13, 2021) “Yes, You Can Collect Social Security from an Ex-Spouse: Here’s How”

How to Maximize Social Security Benefits

“Sophisticated analyses take into account the tradeoff of receiving no income during the deferral period and more income later in retirement.”

Claiming Social Security benefits early costs American households an average of $68,000 in lost wealth. More than a third of Americans claim Social Security at age 62, and two thirds claim long before they reach their Full Retirement Age or FRA, according to a recent article in Think Advisor titled “How to Help Clients Maximize Social Security Benefits.”

People who don’t have enough retirement savings or who stopped working earlier than anticipated may feel they have no alternative but to take Social Security benefits early. This is understandable. There are also those who don’t believe Social Security will be solvent by the time they reach FRA and decide to get their benefits now.

A closer look into the impact of postponing benefits, even when there is no income during the deferral period, can have a profound impact on the recipient and their surviving spouse.

Women (who statistically outlive their male partners) and healthier Americans (often those with higher incomes) who receive the annual income increase from deferring claims are those who stand the most to lose from taking benefits earlier.

If you are among those who think Social Security is going to vanish or cut benefits, Boston University economics professor Larry Kotlikoff says the income of those who claim early will be cut by the same percentage as those who claim later.

Let’s say that benefits are cut by 23% in 2034. The average present value of payments for a man who claims at age 62 is $678,124. If he claims at age 70, the average present value is $764,084. Cutting benefits earlier than 2034 will only increase the difference. Without a benefit cut, the difference between claiming at age 62 and 70 is $131,951 ($818,747 versus $950,698).

Getting the claiming decision right can add six figures to the family balance sheet, so it’s worth a closer look.

It’s best to think like an insurance company when estimating the value of claiming Social Security. When pricing products like annuities and life insurance policies, insurance companies take into account such variables as U.S. government Treasury bonds, actuarial data measuring mortality and market rates on returns on other inflation protected securities.

Health is also a critical factor. How healthy is the person considering when to claim benefits? How healthy is their spouse? Consider how taking benefits early will impact the surviving spouse’s benefits.

Social Security claiming strategies succeed when using an objective fact-based process and recognizing that Social Security is an asset like any other asset and requires decisions to be made with as little emotional or political bias as possible.

Reference: Think Advisor (Feb. 21, 2021) “How to Help Clients Maximize Social Security Benefits”

When Should You Start Filing for Social Security Benefits?

“Choosing when to file for benefits is a critical decision that will affect your monthly retirement income for the rest of your life.”

When it comes to planning for retirement finances, one of the most important decisions concerns when to claim Social Security benefits. There’s no one-size-fits-all answer to the ideal time, but there are some key facts to consider, according to Daily Journal Online’s recent article titled “Are You Ready for Social Security? 3 Questions to Answer Before Claiming Benefits.”

First, how much do you have in retirement savings? Unless you have a healthy pension or another source of income, chances are you’ll rely on Social Security benefits plus your personal savings to cover costs during retirement. How much you have saved, will definitely impact when you file.

Remember, the earlier you claim benefits, the smaller your monthly checks will be. If you start your benefits as early as possible, at age 62, monthly payments will be reduced by up to 30%. Wait until age 70, and your monthly benefits could be up to 32% more each month, in addition to the full benefit amount.

If you expect Social Security benefits to make up the bulk of your retirement income, it’s best to delay taking those benefits as long as you possibly can. If you have more than enough retirement savings, you can take your checks at any time.

How long do you expect to work? You don’t have to retire to claim benefits, but usually that is what happens. When you take benefits, may depend upon when you retire. Be realistic about your retirement date. Almost 40% of people left their jobs earlier than planned, according to a study by the Aegon Center for Longevity and Retirement. A third retired because of health issues, and more than a quarter retired because they were laid off.

If your retirement plan depends upon being able to work until age 70 to max out those Social Security benefits, then you need a backup plan, in case you have to retire early. If you were thinking of retiring in your early 60s, see if you will be able to survive on a smaller monthly benefit, if you claim earlier than your full retirement age.

What’s your spouse’s plan? If both you and your spouse are entitled to Social Security benefits, it makes sense to put a strategy in place. You may both retire and claim at the same time, or one may claim before the other. A common strategy is for the lower earning spouse to claim benefits early, while the higher earning spouse waits a few years. That way, you have a little extra income early in retirement, but the higher-earning spouse’s delay results in larger benefits later.

Life expectancy has to be considered also. Sad, but a fact of this stage of life: one of you will die before the other. When one spouse dies, the survivor can receive 100% of their Social Security benefit amount in survivors’ benefits. If the higher earning spouse can continue to work, the survivor will receive a larger monthly benefit when the first spouse passes.

Take some time to consider all of these elements, when making a plan for Social Security benefits for retirement. While you’re planning, don’t neglect your estate plan. You need to have a Last Will and Testament, Power of Attorney, Medical Proxy, Advance Directive, HIPAA Release form and perhaps a Revocable Living Trust. An estate planning attorney can help create all of these documents to suit your unique situation.

Reference: Daily Journal Online (Dec. 23, 2020) “Are You Ready for Social Security? 3 Questions to Answer Before Claiming Benefits”

How to Benefit from a Roth IRA and Social Security

“Although Social Security helps millions of seniors stay afloat financially, living on those benefits alone could mean winding up cash-strapped in retirement.”

When originally created, Social Security was designed to prevent the elderly and infirm from sinking into dire poverty. When most working Americans enjoyed a pension from their employer, Social Security was an additional source of income and made for a comfortable retirement. However, with an average monthly benefit just over $1,500 and few pensions, today’s Social Security is not enough money for most Americans to maintain a middle-class standard of living, says the article “3 Reasons a Roth IRA Is a Perfect Supplement to Social Security” from Tuscon.com. It’s important to plan for additional income streams and one to consider is the Roth IRA.

Roth IRAs can be funded at any age. Many seniors today are continuing to work to generate income or to continue a fulfilling life. Their earnings can be put into a Roth IRA, regardless of age. If you are still working but don’t need the paycheck, that’s a perfect way to fund the Roth IRA.

Withdrawals from a Roth won’t trigger taxes on Social Security benefits. If your only income is Social Security, you probably won’t have to worry about federal taxes. However, if you are working while you are collecting benefits, once your earnings reach a certain level, those benefits will be taxed.

To calculate taxes on Social Security benefits, you’ll need to determine your provisional income, which is the non-Social Security income plus half of your early benefit. If you earn between $25,000 and $44,000 as a single tax filer or between $32,000 and $44,000 as a married couple, you could be taxed as much as 50% of your Social Security benefits. If your single income goes past $34,000 and married income goes past $44,000, you could be taxed on up to 85% of your benefits.

If you put money into a Roth IRA, withdrawals don’t count towards your provisional income. That could leave you with more money from Social Security.

A Roth IRA is flexible. The Roth IRA is the only tax-advantaged retirement savings plan that does not impose Required Minimum Distributions or RMDs. That’s because you’ve already paid taxes when funds went into the account. However, the flexibility is worth it. You can leave the money in the account for as long as you want, so savings continue to grow tax-free. You can also leave money to your heirs.

While you don’t have to put your savings into a Roth IRA, doing so throughout your career—or starting at any age—will give you benefits throughout retirement.

Reference: Tuscon.com (Oct. 5, 2020) “3 Reasons a Roth IRA Is a Perfect Supplement to Social Security”