Plan as a couple for important Social Security survivor benefits

Security benefits play an important role in retirement planning, as they represent a major source of income for many retirees. While investors have likely thought about when to claim their own benefits, they may not have considered what will happen when one spouse passes away, or how their choices today could substantially impact their surviving spouse’s income options in the future. Understanding who is eligible for survivor benefits, as well as when and how much they can receive, may help provide some clarity and allow for a wider range of choices in the future.

Part of the taxes paid into Social Security are intended to support certain surviving family members when a taxpayer passes away—perhaps most importantly, widows and widowers. Monthly survivor benefits are based, in part, on the deceased taxpayer’s earnings record. The amount a surviving spouse receives depends on many factors, including their age, whether they are eligible for benefits of their own, their earnings record, and the claiming status of the deceased spouse, among other factors.

Importantly, an individual can only receive one set of benefits at a time. If both spouses in a household are receiving Social Security benefits, the surviving spouse will generally receive the equivalent of the larger of the two possible benefits, but not both. As a result, in a household receiving two sets of benefits, the death of one spouse may lead to a significant loss of income from Social Security. Therefore, it’s beneficial to plan ahead so that the surviving spouse can maximize the benefits they receive.

As a couple, you have important choices to make regarding when each spouse should claim their own benefits, as well as what value you may gain by working a few extra years to further grow those benefits. In general, the higher-earning spouse should delay claiming their benefits as long as possible to take advantage of the incremental increases awarded for deferring up until age 70. Doing so aids the household as a whole and sets up the surviving spouse with the largest possible benefits. (For more on the process of claiming, see “How to apply for survivor benefits.”)

Social Security planning is often complex. This is particularly true when it comes to survivor benefits, as there are many variables involved in the planning choices and their implications. For instance:

In the first two scenarios, various factors will still influence the size of any survivor benefits, but the actual choices are somewhat limited. The many complicating factors involved in the third scenario, however, can apply to all three scenarios, especially when it comes to the survivor benefits available. In the next section, we will discuss the variables involved in calculating those benefits and provide a hypothetical example of how payment options may be affected.

In light of the various complexities associated with survivor benefits, here are some key considerations to keep in mind:

Given the many variables involved in the calculation of survivor benefits, it may be helpful to consider a hypothetical example. While this example is particularly illustrative of the third scenario mentioned previously, the options available to the surviving spouse (with regard to survivor benefits) are applicable to the other two scenarios as well.

Daniel, the older spouse, has passed away. His FRA was 66, and his FRA benefit was $24,000 per year. His widow, Susan, is 60 years old and is, therefore, ineligible to collect her own benefits. Her FRA is 67.⁴

The chart “Claiming status and age impact on survivor benefits” illustrates Susan’s survivor benefits depending on the following factors:

If Daniel claimed his own benefits before his FRA, Susan is subject to the “widow limit.” In this case, since Daniel claimed at age 62, Susan will realize no additional increase in her survivor benefits for delaying beyond age 62 and 8 months, which is when she will reach her cap of $19,800 (equal to 82.5% of Daniel’s FRA benefits). Note that if Daniel had claimed early, but close enough to his FRA that the amount he was receiving was greater than 82.5% of his FRA benefits, the widow limit would be higher, and there may be additional incentive for Susan to delay claiming her survivor benefits.

If Daniel passed away any time before his FRA without having claimed his benefits, Susan is entitled to receive 100% of his FRA benefits—provided she waits until her own FRA (age 67) to claim.

If Daniel claimed his own benefits at FRA (or later) or passed away anytime after his FRA without having claimed his benefits, Susan is entitled to receive 100% of the amount Daniel was receiving (or would have received if he had claimed on his date of death)—again, provided she waits until her own FRA (age 67) to claim.

If Susan claims survivor benefits at age 65, the survivor benefits will still be reduced but by incrementally less than the full 28.5% reduction that would have applied if she claimed at age 60.⁵

In all instances, the longer Daniel had delayed claiming his own benefits (up to age 70) and the longer Susan can delay claiming her survivor benefits (up to her FRA), the higher Susan’s potential survivor benefits will be. What’s more, if Susan is still working and earning more than the $22,320 AET limit for 2024, she might consider holding off on claiming survivor benefits. There is a chance that all of her benefits, or at least a significant portion, would be withheld based on her earned income.

For example, if Susan earns $60,000 per year, $18,840 of her benefits would be withheld. While every full and partial month of withheld credits is eventually factored back into the benefits calculation once she reaches her FRA, it is not paid back in one lump sum. Therefore, because Susan’s earned income would limit receipt of her full survivor benefits, she may consider holding off until she stops working or reaches her FRA of 67. Once Susan retires and/or reaches age 67 (whichever comes first), she is no longer subject to the AET and can claim her own or her survivor benefits.

Another critical choice Susan may face depends on whether she is eligible to collect Social Security benefits on her own earnings record.

If she is no longer working, she might consider collecting her own reduced benefits at age 62 and then switching to full survivor benefits at FRA (if higher). Alternatively, if her own benefits at age 70 would be higher than the survivor benefits, she could collect her reduced survivor benefits as early as age 60 and then switch to her own benefits at age 70. Since you can only receive one set of benefits at a time, it may make sense to claim one of the benefits early, even if at a reduced rate, to enable the other benefits to continue to increase.

Your decision about when and whether to claim survivor benefits will ultimately depend on your needs and your situation. As with many aspects of a financial plan, the choices you make early on can affect your options down the road.

Planning how to claim your Social Security benefits as a couple allows you to provide a surviving spouse with better options later. By understanding the trade‑offs and complicating factors involved, you can implement a more thoughtful claiming strategy that makes the most of the benefits available to you both.