Even though we generally think of Social Security as a retirement program, there are also other benefits available. In particular, Social Security can assist the surviving family members of a deceased worker who paid into the program.
Like many aspects of Social Security, however, the rules for survivor benefits are a little complicated. Here’s what you need to know about Social Security survivor benefits:
The rules governing who may receive survivor benefits are very specific. In general, a surviving spouse will receive benefits from the program if they’re caring for the deceased spouse’s children who are under the age of 16, if they’re over the age of 60, or if they’re disabled and at least 50 years of age.
Surviving dependent children are eligible for benefits if they’re under the age of 18, or under 19 and still in high school.
Surviving parents of the deceased may also receive benefits. In that case, the parent(s) must be at least 62 years old, and receiving at least half of their financial support from the deceased.
Size of Benefits
How much survivors are eligible to receive depends upon the Primary Insurance Amount (PIA) of their Social Security benefits. The Social Security Administration defines PIA as “the benefit a person would receive if he/she elects to begin receiving retirement benefits at his/her normal retirement age.” Basically, survivor benefits are determined by percentages of the benefits the worker would have (or did) receive as of retirement.
Widows and widowers who have reached full retirement age will receive 100% of the deceased’s PIA. However, in that case, their own Social Security benefit will disappear. That is, if the deceased’s retirement benefit was higher than that of the surviving spouse, the survivor will receive the entire higher benefit, but will no longer receive the lower one.
If, on the other hand, the spouse who dies has the lower retirement benefit, the survivor will keep receiving the higher benefit, but the lower one will disappear. Basically, the surviving spouse will keep the higher benefit, but not both.
In the case of surviving spouses under the age of retirement who are caring for underage children, the benefit is 75% of PIA. Underage dependent children also receive 75%. In each of those cases, the benefits end once the children reach age 16 (in the first case) and 18 (in the latter).
A single dependent parent is eligible for 82.5% of their deceased child’s PIA. If that adult child was financially supporting both parents, then each parent is eligible for 75% of PIA — or 150% total.
Maximum Family Amount
The Social Security Administration limits the amount of benefits each family can receive per month. That limit is determined by several variables, but the basic rule of thumb is that families can’t receive more than about 150% to 180% of PIA per month.
If the total of a family’s survivor benefits is more than the maximum limit, then each individual’s benefits will be reduced proportionately.
The Bottom Line
Knowing what survivor benefits will be available to your family is an important part of estate planning. Make sure you know what your family will be able to count on from Social Security in the event of your death.
Have you accounted for survivor Social Security survivor benefits in your estate planning?
Editor's Note: I've begun tracking my assets through Personal Capital. I'm only using the free service so far and I no longer have to log into all the different accounts just to pull the numbers. And with a single screen showing all my assets, it's much easier to figure out when I need to rebalance or where I stand on the path to financial independence.
They developed this pretty nifty 401K Fee Analyzer that will show you whether you are paying too much in fees, as well as an Investment Checkup tool to help determine whether your asset allocation fits your risk profile. The platform literally takes a few minutes to sign up and it's free to use by following this link here. For those trying to build wealth, Personal Capital is worth a look.