Social Security is best known for retirement benefits, and for good reason. After all, it is the largest retirement program in the United States by far, and most U.S. workers will receive retirement income through Social Security at some point in their lifetime.
However, there’s quite a bit more to Social Security than retirement benefits, including two programs that can be extremely valuable in estate planning. These are benefits for spouses of retired workers and survivors of deceased workers, and it’s important for Americans to be familiar with both.
Social Security spousal benefits
Social Security benefits for retired workers are designed to replace about 40% of the average person’s pre-retirement income. The idea is when you combine Social Security with other sources of retirement income, like 401(k)s, IRAs, or pensions, you’ll hopefully have enough to maintain your lifestyle after leaving the workforce.
But what about individuals who never worked, didn’t work long enough to qualify for Social Security retirement benefits, or earned relatively little throughout their careers compared with their spouses? In situations where one spouse in a married couple was a stay-at-home parent, this is a rather common scenario.
For this reason, Social Security offers benefits for spouses. The short version is that a spouse of a retired worker can be eligible for a monthly Social Security benefit. The amount varies but can be as much as half of the primary insurance amount, which is what the spouse’s benefit would be at full retirement age. In other words, for example, if your Social Security retirement benefit—as the retired worker—at full retirement age is $2,500 per month, your spouse could be eligible to receive payments of as much as $1,250.
Of course, there are some criteria that need to be met. For one thing, your spouse must be at least 62 years old—the age everyone must meet to qualify for retirement benefits—or they need to be caring for a qualifying child who is under 16 or disabled. Additionally, you—the retired worker—must have started collecting your benefit before a spousal benefit can be paid.
Claiming a spousal benefit early
Just like with your Social Security retirement benefits, spousal benefits can be reduced if they are taken before your spouse reaches full Social Security retirement age. If they were born in 1960 or later, their full retirement age is 67 (it is a bit lower for those born before 1960). So, eligible spouses can start collecting a benefit as early as age 62 in most cases, but it can be reduced according to the following rules:
- A spousal benefit is reduced by about 0.69% for each month prior to full retirement age, up to 36 months.
- Beyond 36 months, the benefit is reduced by another 5/12 of 1% (about 0.42%).
In a nutshell, if a spousal benefit is claimed at 62, it will be permanently reduced by 35% if the beneficiary’s full retirement age is 67. For example, if they are entitled to a $1,250 monthly spousal benefit based on your work record and decide to claim at age 62, their initial benefit would be reduced to $812.50.
It’s also worth noting that your spouse’s work record is first considered. If their own retirement benefit is higher than one-half of your primary insurance amount, then that’s what they will be entitled to. But if their own retirement benefit is less than half of your primary insurance amount (or if it is zero), a spousal benefit will be paid.
Social Security survivors benefits
But what if you pass away? Is your spouse stuck with only half of your Social Security retirement benefit for the rest of their life?
Fortunately, the answer is no. Social Security also has a program known as survivors benefits that is designed to provide income to families of workers who die.
How much can your spouse get?
If your spouse is at their full retirement age or older, they would essentially “take over” your retirement benefit, assuming it is higher than what they would get on their own work record. If they have not yet reached full retirement age, they could receive a reduced benefit based on a specific formula until they reach full retirement age. Here's a summary:
| Spouse’s age and other circumstances |
% of deceased worker's benefit amount |
| Full retirement age and older |
100% |
| Age 60 to full retirement age |
71.5% to 99% |
| Age 50-59 |
59% to 71.5% |
| Disabled or caring for a child under 16 (any age) |
75% |
Data source: SSA, accessed May 31, 2023
Even if a surviving spouse is divorced, they could still get a survivors benefit on your work record if the marriage lasted at least 10 years.
How much will your other survivors get?
In addition to supplying income for your surviving spouse, Social Security could also provide survivors benefits to your children, as well as other survivors in certain circumstances.
If you have surviving children under 18 (or under 19 if they’re still in high school), they could receive a survivors benefit equal to 75% of your basic retirement benefit amount. (Note: Once you start collecting Social Security, your qualifying children may be able to collect benefits on your work record even if you’re still alive.)
If you die while your elderly parents are dependent on you, they could also be eligible. Surviving dependent parents aged 62 or older can get a survivors benefit equal to 82.5% of the worker’s retirement benefit (75% each if there are two surviving dependent parents).
Mind the family maximum
In certain situations, it might sound like survivors benefits could add up to quite a bit of money. For example, if you pass away with a spouse who has reached their full retirement age, two teenage children, and a dependent parent, the percentages they could get add up to 332.5% of your full retirement benefit. Is that what they would receive? The short answer is no!
The Social Security Administration sets a family maximum that can be paid out to survivors. While the formula is a bit complicated, the result is that the family maximum generally falls between 150% and 180% of the worker’s primary insurance amount or benefit at full retirement age.
If the eligible benefits exceed this, all survivors benefits will be reduced proportionally. As a simplified example, if survivors are entitled to a combined 300% of the worker’s primary insurance amount, and their family maximum is 150%, all survivors benefits would be cut in half.
You still need a well-rounded wealth plan
To be clear, we believe Social Security spousal or survivors benefits aren’t a replacement for an adequate savings and wealth plan. Yes, Social Security survivors benefits can provide you with peace of mind, but there are a couple of key points to keep in mind.
First, just like Social Security’s retirement benefits aren’t designed to replace all of your income, survivors benefits likely won’t do so, either.
Second, in addition to one-time costs like funeral expenses (Social Security provides a one-time death benefit to spouses—but it’s only $255), adequate savings can fund large goals that you weren’t able to accomplish while you were alive, such as making sure there is enough in your kids’ or grandkids’ college funds or paying off your mortgage and auto loans.
In short, Social Security—and its spousal and survivors benefits—is only one component of a wealth plan. It’s probably not enough to maintain your family’s desired lifestyle—nor is it designed to do so. That’s where a Wealth Advisor can help—to create a plan that includes Social Security that works for your wants and goals.
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