When you are married you most likely talked about social security and death benefits. When you have a spouse pass away, you have the opportunity, depending on how long you have been married, to take their benefits until your retirement age. Let’s look at some points to consider before you make the decision to take the benefits or wait.
When you are considering social security retirement benefits, you have two options. You can choose to take the benefits early at a reduced rate or wait until full retirement age for the full rate. When considering your options you might want to look at things like health and employment plans.
If you are in poor health you might want to consider if you most likely will live to full retirement age. You might choose to take it early in order to have the income between now and the time of death. If you are in good health and still working you might want to wait to and take your full amount. Either way, it is a good idea to get a calculator out and figure out the number of years it will take to break even between the two amounts.
When your spouse dies you will be entitled to spousal benefits. You and your spouse must have been married for at least 10 years. There is a formula that The Social Security Administration uses to calculate your benefit amount. This will vary depending on your personal situation. If your spouse took their social security benefit before full retirement age you will get a percentage of a percentage of the amount of their full retirement age amount. If your spouse waiting until full retirement age it will be only a percentage of the full amount. It will also change if you take the benefit before your full retirement age.
Clearly, this is makes things very confusing. Here is a link that you might find helpful in understanding what your benefit amount might be. Check out this resource for detailed explanation. There are also many YouTube videos that can be helpful. They can help you figure out your equation before talking with Social Security or to better understand how they came up with the amount you will receive.
When you are a spouse looking to take spousal benefits it can be very overwhelming. Make sure you consider your entire taxable income and other considerations such as healthcare. Before you are eligible for Medicare you must provide your own insurance. If you are on state Medicaid the amount you receive from spousal benefits might put you over the threshold costing you more out of pocket.
When you are taking social security benefits you are limited on the amount of taxable income. If you make more than the allotted threshold you will be penalized by a reduction of your social security check. So, you will not only be putting into social security even more, you will be receiving less of the over all amount you have put in. You will also be taxed on your income if you make over a specific amount even after full retirement.
When it comes to spousal death it can easily become overwhelming with all the “to-dos”. When it comes to social security and spousal benefits it can become very confusing. Before your spouse passes away they may have chosen to take social security early or at full retirement. That will impact the calculation The Social Security Administration uses to calculate your benefit amount. Other things to consider is your income and healthcare options.
What about you, what have you considered about your social security when your spouse passes away?
Collins Michael says
Your article really helped me understand some key points on social security and death benefits. You said it all, spousal death can be overwhelming
Richard York says
Thank you for sharing this, I don’t have a spouse yet, but this will help for future reference. We need to consider things as well.