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Survivor Benefits: A Guide To This Often Overlooked Insurance Add-On

Many people think that Social Security only provides retirement checks, but that's just part of what the Social Security Administration (SSA) does. In the event of your death, your survivors may also be entitled to Social Security benefits, an important consideration when figuring out how much life insurance you'll need to provide for your family when you die.

Part of the Social Security tax you pay goes toward survivors benefits. When someone who has worked and paid into Social Security dies, these survivors benefits can be paid to certain family members, including widows, widowers (and divorced widows and widowers), children, and dependent parents. It's a benefit that shouldn't be overlooked when figuring out your life insurance needs.

Related Guide: Please see the Financial Guide: LIFE INSURANCE: How Much And What Kind To Buy.

You, along with millions of other people, earn survivors benefits by working and paying Social Security taxes and roughly 98% of the children in this country are eligible for benefits if a working parent should die. In fact, Social Security pays more benefits to children than any other federal program.

Eligibility for Survivors Benefits

When you die, certain members of your family may be eligible for survivors benefits if you paid Social Security taxes and earned enough "credits". Most people earn a maximum of four credits per year. In 2013 for example, you receive one credit for each $1,160 of earnings ($4,640 to get the maximum of four credits). The number of credits you need to get retirement benefits depends on your date of birth. If you were born in 1929 or later, you need 40 credits (10 years of work). People born before 1929 need fewer than 40 credits (39 credits if born in 1928, 38 credits if born in 1927, etc.). The younger you are, the fewer credits are needed to be eligible for survivors benefits, but nobody needs more than 40 credits (10 years of work).

If you stop working before you have enough credits to qualify for benefits, your credits will remain on your Social Security record. If you return to work later on, you can then add credits so that you may qualify. No retirement benefits can be paid until you have the required number of credits.

If you are like most people, however, you will earn many more credits than you need to qualify for Social Security. While these extra credits do not increase your Social Security benefit, the income you earn while working will increase your benefit.

Under a special rule, benefits can be paid to your children, as well as your spouse who is caring for the children even if you don't have the number of credits needed. Benefits can be paid as long as you have credit for one-and-one-half years of work in the three years just before your death.

Who Can Get the Benefits?

When you die, your widow or widower may be able to receive full benefits at full retirement age. Full retirement age is age 66 for people born in 1945-1956 and gradually increases to age 67 for people born in 1962 or later. Reduced widow or widower benefits can be received as early as age 60. If your surviving spouse is disabled, benefits can begin as early as age 50.

In addition, a widow or widower can be paid benefits at any age if she or he takes care of your child who is under 16 or disabled and who gets benefits.

Dependent parents, age 62 or older (for parents to qualify as dependents, you would have had to provide at least one-half of their support) and unmarried children under age 18 (up to age 19 if they are attending elementary or secondary school full time) are also eligible for survivors benefits. Your children can get benefits at any age if they were disabled before age 22 and remain disabled, and under certain circumstances, benefits can also be paid to your stepchildren or grandchildren.

There is a special one-time payment of $255 that can be made when you die if you have accumulated enough work credits. This payment can be made only to your spouse or minor children if they meet certain requirements.

If you have been divorced, your former wife or husband who is age 60 or older (50-59 if disabled) can get benefits if your marriage lasted at least 10 years. Your former spouse, however, does not have to meet the age or length-of-marriage rule if he or she is caring for his/her child who is younger than age 16 or who is disabled and also entitled based on your work. The child must be your former spouse's natural or legally adopted child.

Benefits paid to you as a surviving divorced spouse who meets the age or disability requirement as a widow or widower won't affect the benefit rates for other survivors getting benefits on the worker's record. However, if you are the surviving divorced mother or father who has the worker's child under age 16 or disabled in your care, your benefit will affect the amount of the benefits of others on the worker's record.

Benefits paid to a surviving divorced spouse who is 60 or older will not affect the benefit rates for other survivors getting benefits.

How Much Are the Benefits?

The amount of money your family receives from Social Security depends on your average lifetime earnings. The higher your earnings, the higher their benefits will be. There is a limit to the benefits that can be paid to you and other family members each month. The limit varies, but is generally between 150 and 180 percent of the deceased's benefit amount.

Tip

Tip: To get an estimate of the Social Security survivors benefits that could be paid to your family, call Social Security at 800-772-1213 and ask for a Request for Earnings and Benefit Estimate Statement. Upon completion, and return of the form, you will receive a statement of your complete earnings history along with estimates of your benefits for early retirement, full retirement, and delayed retirement. You'll also receive an estimate of the disability benefits you could receive as well as the amount of benefits payable to your spouse and children due to your retirement, disability, or death. If you are age 60 or older, you can get an estimate of your retirement benefits by telephone. There is no charge for this service.

How to Apply for Benefits

When you apply for benefits, you will need to furnish certain information including proof of death—either from a funeral home or death certificate, your Social Security number as well as the deceased worker's, your birth and marriage certificates (if applicable), dependent children's Social Security numbers, if available, and birth certificates.

How you sign up for survivors benefits depends on whether or not you are getting other Social Security benefits, but in general, survivors receive:

  • A widow or widower, at full retirement age or older, generally receives 100 percent of the worker's basic benefit amount;
  • A widow or widower, age 60 or older, but under full retirement age, receives about 71-99 percent of the worker's basic benefit amount; or
  • A widow or widower, any age, with a child younger than age 16, receives 75 percent of the worker's benefit amount.
  • Children receive 75 percent of the worker's benefit amount.

No Other Social Security Benefits

You should apply for survivors benefits promptly because, in some cases, benefits may not be retroactive. The rules are complicated and vary depending on your situation, so you should talk to a Social Security representative about the options available to you.

Getting Other Social Security Benefits

If you are getting benefits as a wife or husband based on your spouse's work, when you report the death to SSA, your payments will change to survivors benefits.

If you are getting benefits based on your own work, you may be able to get more money as a widow or widower. If so, you will receive a combination of benefits that equals the higher amount. You will need to complete an application to switch to survivors benefits, and SSA will need to see your spouse's death certificate. In addition, if you get Social Security survivors benefits, the amount of your benefits may be reduced if your earnings exceed certain limits. There are no limits once you reach 70.

Pensions from work not covered by Social Security

If you get a pension from work where you paid Social Security taxes, that pension will not affect your Social Security benefits. However, if you get a pension from work that was not covered by Social Security— for example, the federal civil service, some state or local government employment or work in a foreign country—your Social Security benefit may be reduced.

If You Still Work

If you work while getting Social Security survivors benefits and are younger than full retirement age, your benefits may be reduced if your earnings exceed certain limits. The full retirement age was 65 for people born before 1938 but will gradually increase to 67 for people born in 1960 or later. There is no earnings limit beginning with the month you reach full retirement age. Also, your earnings will reduce only your benefits, not the benefits of other family members.

Tip

Tip: To find out what the limits are this year and how earnings above those limits reduce your Social Security benefits, contact Social Security to request the leaflet How Work Affects Your Social Security Benefits (Publication No. 05-10069).

If You Remarry

In general, you cannot get survivors benefits if you remarry. But remarriage after 60 (50 if disabled) will not prevent benefit payments on your former spouse's record. And, at 62 or older, you may get benefits on the record of your new spouse if they are higher.

Medicare

Medicare is a health insurance plan for people who are 65 or older. People who are disabled or have kidney failure also can get Medicare. Like Social Security, Medicare is financed by a portion of the payroll taxes paid by workers and their employers.

Note: If you live in Puerto Rico you will not receive Medicare Medical Insurance (Medicare Part B) automatically. You will need to sign up for it during your initial enrollment period or you will pay a penalty. To sign up, call the Social Security Administration at 1-800-772-1213 or contact your local Social Security office.

Medicare has four parts:

  • Hospital Insurance - helps pay for inpatient care in a hospital or skilled nursing facility (following a hospital stay), some home health care and hospice care.

  • Medical Insurance - helps pay for doctors' services and many other medical services and supplies that are not covered by hospital insurance.

  • Medicare Advantage - plans are available in many areas. People with Medicare Parts A and B can choose to receive all of their health care services through one of these provider organizations under Part C.

  • Prescription Drug Coverage - helps pay for medications doctors prescribe for treatment.

Confidentiality of Your Personal Information

Social Security keeps personal information on millions of people. That information, such as your Social Security number, earnings record, age, and address, is kept confidential. Generally, SSA will discuss this information only with you and needs your permission if you want someone else to help with your Social Security business.

If you send a friend or family member to an SSA office to conduct your Social Security business, send your written consent with them. Only with your written permission can SSA discuss your personal information with them and provide the answers to your questions.

In the case of a minor child, the natural parent or legal guardian can act on the child's behalf in taking care of the child's Social Security business.

The privacy of your records is guaranteed. There are times when the law requires Social Security to give information to other government agencies to conduct other government health or welfare programs-such as Aid to Families with Dependent Children, Medicaid, and SNAP, the Supplemental Nutrition Assistance Program (formerly known as food stamps). Programs receiving information from Social Security are prohibited from sharing that information.


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