Navigating Widow and Widower Benefits with Social Security

Ok, we know…no one ever wants to talk about what you will do when your spouse dies. What a morbid thought! Unfortunately, death is a natural part of life and talking about death before it happens can be of great benefit to you and your family. Even though you don’t want to think about your husband or wife dying, it is important to bring up the topic with your financial advisor as you work on your retirement planning calculations.

Widow and widower benefits are the type of benefits that greatly affect survivors when a loved one dies. If you are a married couple, you should figure in widow or widower benefits when you plan out your retirement calculations. This can be especially important if one spouse’s income is substantially larger than the others. Let’s take a closer look.

The Importance of Addressing Widow and Widower Social Security Benefits

There is no doubt that the psychological effect of imagining your spouse dying can be complicated. But there is nothing more complicated than trying to calculate Social Security Administration benefits for survivors after your spouse is already gone. That’s why married couples need to understand how important this topic is when they create a strategy and plan their retirement.

Retirement benefits can greatly affect your widow or widower benefits. And, as you get older, this becomes more complicated when you try to navigate your retirement years and stay afloat financially. The general rule when it comes to widow or widower insurance benefits, also called WIB, is that they are equal to 100% of the deceased spouse’s retirement benefit. Seems simple, right? It’s not.

The Social Security Administration uses three factors when calculating WIB. If you want to plan to leave your spouse the greatest possible benefit when you die, you are going to want to understand these three factors and plan accordingly. The three factors SSA uses to determine WIB are:

  • Whether or not your deceased spouse was receiving retirement benefits
  • The age your spouse was when they passed away
  • The age you start to take your widow or widower benefits

Obviously, the second factor is out of our control. But, you do have somewhat of a control over the first and third factors. And, you can use that control to your benefit. If you want to leave your spouse with the largest possible benefit, you should wait as long as possible to claim your retirement benefits.

By waiting until you have at least reached the full retirement age, you can ensure that your surviving spouse will receive the full primary insurance amount you were getting when you retired. The longer you wait to collect your benefits, the higher your surviving spouse’s benefits will be. Equally, the sooner you take your benefits, the lower your spouse’s benefits will be.

How Is WIB Calculated?

There are four general formulas that the Social Security Administration uses to calculate widow or widower insurance benefits. All four come into play before the SSA accounts for the age your surviving spouse begins to collect their benefits. The four general formulas are:

If you pass away before full retirement age and have not begun to collect retirement benefits prior to your passing.

In this case, your spouse is entitled to your full primary insurance amount.

If you pass away after full retirement age and are receiving retirement benefits when you pass.

In this case, your spouse’s widow/widower benefit will be a calculation of your primary insurance amount plus your delayed retirement credits.

If you pass away after full retirement age and are NOT receiving retirement benefits when you pass.

In this case, your spouse’s WIB will also be the sum of your PIA and your delayed retirement credits. But, calculations will be drawn upon the DRC equal to what you would have received if you filed for your benefits on the day you died.

If you pass away before full retirement age and are receiving retirement insurance benefits at the time of your passing.

This final way of calculating is the most complex. In this case, the SSA will calculate three numbers. They will include the retirement benefit you were receiving when you died, 5% of your PIA, and the difference between your PIA and the age-based reduction amount that determines your spouse’s age-reduced WIB. The SSA compares these numbers and chooses the higher benefit of the three.

There is no doubt that navigating widow and widower SSA benefits can be a difficult task. And with the circumstances surrounding the determination of benefits being the thought of your spouse no longer being with you, it’s not generally a topic many people want to address early on. But, when you work with your financial planner to determine your WIB before you start your retirement planning, you are doing yourself and your spouse a major favor.

Putting off your benefits until the last possible minute is always the best option. It only increases your monthly benefit amount, and increases your spouse’s survivor benefit. When you put off your WIB now, you and your spouse will benefit when the times get tough. And, although difficult to discuss, it’s a decision your spouse will thank you for long after you are gone.

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