Ask Rusty – How do Social Security survivor benefits work?

Published 12:03 am Saturday, October 15, 2022

Dear Rusty: Social Security is confusing in itself and gets even more confusing when you receive multiple answers to the same question from multiple sources. During my research I came across your organization, and I hope you can assist me in making educated choices regarding my Social Security benefits.

My husband of 20+ years passed away in 1998 and I have not remarried. I will be turning 65 next month (born in 1957), and my full retirement age is 66 years and 6 months. I work full-time, have not made any specific retirement plans, and my current gross salary is over $60,000. So, my questions are: Can I collect any of my late husband’s social security? If yes, when, and how? Signed: Confused Widow

Dear Confused Widow: From the facts you provided, you are eligible to collect a survivor benefit from your deceased husband, but because you are working full time earning over $60,000 you will not be able to collect those benefits at this time. Here’s why:

Social Security imposes an “earnings test” for anyone who collects benefits before reaching their full retirement age. The penalty for exceeding the earnings limit is $1 for every $2 you are over the limit (which is $19,560 for 2022). With $60,000 in earnings, you would be $40,440 over the limit, for which SS would impose a penalty of $20,220. That essentially means that your survivor benefit would be entirely (or almost entirely) offset by the penalty for exceeding the earnings limit, leaving you unable to collect a survivor benefit at this time. The earnings test is in effect until you reach your full retirement age (FRA), after which your earnings will no longer affect your Social Security benefits.

There are also other nuances you should know about. Claiming any SS benefit before reaching your FRA will result in a permanently reduced benefit. If claimed at your FRA, your survivor benefit would be 100% of the amount your husband was receiving (or entitled to) at this death but claimed at age 65 your survivor benefit would be reduced to about 93% of his benefit entitlement. Also, you will be eligible for your full widow’s benefit at 66 years and 2 months of age because – in your specific case – your “widow’s FRA” is less than your normal full retirement age. However, the earnings test previously described is still in effect until you reach your normal FRA of 66 years and 6 months.

 

In the year you reach your normal full retirement age, the earnings limit (for the months prior to reaching your FRA) increases by about 2.5 times. You’ll reach your normal FRA in February 2024 and, at your current earnings level, wouldn’t exceed the higher earnings limit in 2024. That means the earnings test shouldn’t affect your SS benefits in 2024 at your current income level, so you could claim your full survivor benefit effective January 2024 without penalty.

You will also have the option, if desired, to claim only your survivor benefit and permit your personally earned SS retirement benefit grow. It would be wise to do that if your personally earned SS retirement benefit at maximum will be more than your maximum survivor benefit as a widow. After reaching your FRA, your personal benefit will grow by .667% for each month you wait to claim it, up to age 70 when your own benefit would be 28% more than it would be at your normal FRA. So, you could collect your full survivor benefit at your normal FRA, continue to work if desired, and switch to your higher personal benefit at age 70 (and collect that for the rest of your life). If you expect to achieve at least average longevity (about 87 for a woman your current age), and your own maximum benefit will be more than your benefit as a widow, that is an option you may wish to consider.

This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at ssadvisor@amacfoundation.org.