Back when Congress passed the Social Security Act in 1935, most American families had only one income-earner. With that in mind, the architects of the Social Security program designed auxiliary benefits that would protect spouses and dependent children when the working head of household retired or died. The benefits you earn based on your own work history are your primary benefits. Benefits that a family member may claim from your record are called auxiliary benefits.
Today, those auxiliary benefits are still in place, but it’s not always easy to figure out how they work. In fact, it can be frustratingly difficult. In this article we’ll cover the key points to remember about auxiliary benefits, from who can claim them to when and how.
Who can claim benefits from my record?
Auxiliary benefits are divided into two categories: those that kick in before a worker’s death and those that go to the worker’s survivors. The second kind of benefits are often called survivor or Social Security death benefits. Here are the rules:
While you’re alive, your spouse and any ex-spouse(s) become eligible to claim spousal benefits from your record, beginning when they turn 62. In order for your husband or wife to claim Social Security spousal benefits (equal to 50% of your benefit) you must have already claimed your primary benefits. Divorced spouses, though, can begin claiming benefits on their ex’s record whether or not the ex has filed for retirement benefits.
Minor children and disabled children of any age who became disabled before age 22 are also eligible to receive auxiliary benefits if their retired parent has started claiming primary benefits.
After a worker eligible for primary Social Security benefits dies, a few classes of protected individuals are entitled to claim auxiliary survivor benefits (equal to 100% of the deceased’s benefits). The folks with this kind of Social Security eligibility include:
- Surviving spouses (a.k.a. widows and widowers) married for at least 10 years, who can start collecting reduced benefits when they turn 60 and full survivor benefits at full retirement age
- Surviving divorced spouses married for at least 10 years, who can collect reduced benefits from age 62 and full benefits at their full retirement age, provided they don’t remarry
- Dependent parents, if the worker’s financial support made up at least half of their support
- Minor children up to age 18, or up to age 19 if still in secondary school
- Adult children if disabled before age 22
- The mother or father of the deceased’s children (including an ex-spouse), who is caring for the deceased’s minor children, can claim Social Security death benefits until the children reach age 16
Can my surviving spouse claim my Social Security death benefits and their own primary benefits?
Nope. Auxiliary benefits were designed to protect the non-working spouses and children of workers, not to provide extra money to surviving spouses whose work histories make them eligible for benefits on their own record.
A surviving spouse whose age and labor force participation make them eligible for primary Social Security benefits should not expect to receive full Social Security death benefits on top of their own check. The Social Security Administration wants to guard against what it considers “excess benefits,” so will adjust the benefits of anyone who is eligible for both spousal/death benefits AND primary benefits.
Social Security will pay out the larger of either the spousal/survivor benefits or the primary benefits, but not both. This is known as the Dual Entitlement Rule. So, if you consistently earned more than your spouse and your spouse predeceases you while you’re both claiming Social Security, you won’t get an income boost because your primary Social Security benefits are greater than the death benefits you’re eligible for.
If you’re a widow or widower you’re eligible to claim death benefits beginning at age 60, or age 50 if you’re disabled. You can claim auxiliary benefits while letting your own benefits grow until you reach age 70. Alternatively, you can claim your own benefits beginning at age 62 and wait until later to claim auxiliary benefits.
The Delayed Retirement Credit
For every year between your full retirement age and age 70 that you don’t claim benefits, you’ll get a credit of 8% of your benefits. And on top of that, your benefits will get a Cost-of-Living Adjustment (COLA), a bump in your benefits based on how the Social Security Administration estimates each year’s increase in the cost of living. That’s why many people wait to file until after their full retirement age.
The longer you wait to claim primary benefits up to age 70, the more time they have to grow. You will get larger per-month benefits if you wait longer to begin collecting them. That’s why many experts encourage people to think of 70 as the true full retirement age for Social Security purposes.
Is your spouse still alive? Well, as of April 30, 2016, you’ll no longer be able to claim spousal benefits and defer your primary benefits, letting them grow until you reach age 70. The day you apply for Social Security benefits, whether it’s at 62 or 70 or any age in between, you’ll be filing for the larger of either your spousal or primary benefits.
How can a married couple maximize the surviving spouse’s benefits?
I’m glad you asked! Many Americans are so excited to start collecting checks when they hit their sixties that they forget to plan a Social Security strategy that makes sense for their spouse, too. The age at which you begin taking retirement benefits affects how much your monthly payments will be for the rest of your life… and beyond. Your filing age will set the amount that will go to your survivors as Social Security death benefits.
The Bipartisan Budget Act of 2015 changed the auxiliary benefit rules in important ways. First, as of April 30, 2016, the file-and-suspend strategy for maximizing spousal benefits is no longer allowed. That strategy allowed one member of a couple, usually the higher earner, to file for primary benefits at 62 and then suspend those benefits, allowing them to grow until the filer reached age 70. In the meantime, the first person’s spouse would file for spousal benefits and let his/her own primary benefits grow. It was a lucrative strategy for those lucky folks who took advantage of it, but it has been phased out.
Certain retirees are grandfathered in (no pun intended) and can still take advantage of the old file-and-suspend strategy. If you’re already receiving Social Security benefits as of the beginning of 2016, you’re good. If you will reach your Full Retirement Age before April 30, 2016 you can still file and suspend, enabling your own benefits to grow and your spouse to claim auxiliary benefits while letting his/her primary benefits grow, too. So, if you were born on or before May 1, 1950 and submit your request to file and suspend on or before April 29, 2016 you can still take advantage of the file-and-suspend strategy.
For everyone else, if you file for your own benefits before age 70 and then have a change of heart and decide you want to take advantage of Delayed Retirement Credits, you can still suspend your benefits. But if you suspend your benefits, any benefits based on your record (meaning spousal benefits or benefits for minor/disabled children) will be suspended, too. Retirees who un-suspend their benefits will no longer get a lump sum payment as of April 30, 2016.
Second, the Bipartisan Budget Act of 2015 ended the “Restricted Application for Spousal Benefits” option, which allowed a spouse to file for just spousal benefits, letting their own primary benefits grow in the meantime. But there’s another group that’s grandfathered in to spousal benefits. Anyone born before January 1, 1954 will still be able to file a Restricted Application for Spousal Benefits at full retirement age, claiming spousal benefits equal to 50% of their partner’s primary benefits while waiting until age 70 to claim their own primary benefits, which will have been earning Delayed Retirement Credits.
As for the rest of us? Once April 30, 2015 rolls around, there will be no more file-and-suspend strategy and no more Restricted Application for Spousal Benefits. File for any kind of Social Security benefits and you’ll get the higher of either your own benefits or your spousal benefit. The end of “Restricted Application” means you won’t be able to file for spousal benefits to give you some extra income while you let your primary benefits earn Delayed Retirement Credits. You won’t be able to file and suspend to let your dependents start claiming auxiliary benefits while your own benefits grow.
These (complicated) rules governing Social Security spousal benefits are why it’s so important to consult with your spouse before either of you files for benefits. One of you might want to delay claiming until age 70, assuming your household budget will allow it. It’s rarely advantageous for both spouses to delay until age 70, though.
If the higher-earning spouse delays until age 70, that sets the couple up for bigger benefits checks while both are living and for the surviving spouse to have higher widow/widowers’ benefits, too. If the higher-earning spouse dies first, the surviving spouse will have higher death benefits if the higher-earning spouse waited until age 70 to claim. And if the higher-earning spouse is the surviving spouse, his/her primary benefits will be higher than the survivor benefits anyway, so waiting until 70 to claim is still advantageous.
What about my ex?
Spousal benefits for divorced spouses are affected by the Bipartisan Budget Act, too. Previously, divorced spouses who were married for 10 years or more could claim reduced auxiliary benefits from their ex’s record when they reached age 62, or full auxiliary benefits when they reached full retirement age, all while letting their own benefits grow. That’s no longer the case as of April 30, 2016.
If you’re divorced (but were married for 10 years or more) and you turn 62 on or before January 1, 2016, you can still file a Restricted Application and receive your divorced spousal benefits, waiting until age 70 to claim your primary retirement benefits. But those who aren’t in that age group will no longer be able to claim spousal benefits without claiming their primary benefits. Like still-married spouses, ex-spouses will be assumed to be claiming all their benefits when they first file.
Note that a divorced spouse married for 10 years or more can claim full auxiliary benefits on their ex’s record at any age if he or she is caring for the dependent minor child of the ex-spouse.
Also, the divorced spousal benefit for people whose ex-spouses are still alive is lower than the divorced widow(er)’s benefit.
If you remarry, it doesn’t keep your ex from being eligible to claim benefits on your record. But having an ex who is claiming benefits on your record won’t keep your new spouse from being able to claim benefits either.
You and your ex can also claim auxiliary benefits on each other’s records—it isn’t just one ex who has a claim on the benefits of the other. FYI—you’d be surprised how many people end their marriages just before the 10-year mark and leave Social Security money on the table.
How do I claim Social Security death benefits after the loss of a loved one?
Applications for Social Security survivor benefits cannot be done online. You can call the Social Security Administration’s toll-free number (1-800-772-1213), or make an appointment at your local Social Security office.
Are benefits paid retroactively?
No one wants to interrupt their grieving process to fill out forms and wrangle with bureaucracy. Unfortunately, though, the Social Security Administration does not make retroactive payments after a period longer than six months. If you wait more than six months to claim Social Security death benefits, you will not be entitled to back payment for the time over six months. So it pays to make your benefit claim appointment promptly.
What if I remarry?
If you wait until age 60 to remarry (or age 50 if you are disabled), your new civil status won’t affect your eligibility for survivor benefits. Again, lots of people leave money on the table by making big life decisions without consulting the Social Security cut-offs. Our advice: don’t get remarried at age 59-and-11-months if you can wait until age 60! (We must add a note that we are not marriage experts or counselors.)
What’s the Family Maximum Benefit?
The point of the Family Maximum Benefit (FMB) is to keep family members who are living together from all claiming full auxiliary benefits from the same record. Social Security is pretty strapped for cash, and doesn’t want too many people to claim benefits from the record of only one person who paid into the system.
Take the case of a family of four, with one retired worker, one spouse and two minor children. If you added up the benefits, the retired worker would get 100%, the spouse would be eligible for 50% of the worker’s benefits and each child would be eligible for 50% as well. Because of the FMB, though, this family won’t be able to claim all of those benefits. Instead, the spouse and children’s auxiliary benefits will be adjusted to make sure they fall below a certain percentage of the retired worker’s benefits.
A wage earner’s personal maximum benefits + the maximum auxiliary benefits for all eligible family members = the Family Maximum Benefit. This maximum is computed as a percentage of the worker’s maximum primary benefit, and ranges between 150% and 187% of those benefits.
Families with the lowest incomes fall under the 150% rule, meaning that the family can only claim a maximum of 150% of a worker’s Primary Insurance Amount (PIA). Meanwhile, middle-income families can claim up to 187% of benefits, and the highest-earning families can claim up to 175%. Yes, you read that correctly.
What about the Government Pension Offset?
The Government Pension Offset (GPO) reduces auxiliary Social Security benefits for people who earn a pension from federal, state or local government work they did and for which they did not pay Social Security taxes. The GPO lowers your spousal or survivor benefit by $2 for every $3 you get from a government pension.
And the Windfall Elimination Provision?
The Windfall Elimination Provision (WEP) is another way that the Social Security Administration limits the benefits of people who have other sources of government retirement income. If you have a pension from government employment, you may be subject to the WEP.
Unlike the GPO, the WEP applies to primary benefits, not auxiliary benefits. The WEP acts as a check on the primary benefits of someone who has held two different kinds of jobs—one subject to Social Security taxes and the other not. In some states, the WEP applies to public school teachers who have retirement income from defined benefit pension plans. The WEP can reduce your Social Security by up to half of your pension benefit.
What about the lump-sum Social Security death benefit?
The lump-sum Social Security death benefit is a one-time payment of $255. If a person is already claiming spousal benefits at the time their spouse dies, that person does not need to submit a separate application for the lump-sum Social Security death benefit. The $255 will automatically be credited. Dependent children, though, will need to apply to receive the $255 payment.
Will Social Security auxiliary benefits pay for my yacht?
Nope. The exact monthly payment that you can expect in auxiliary benefits depends on a constellation of factors—how much your spouse made while working, how much you made, how old your spouse was at the time of claiming benefits, how old you are when you claim, whether other people in your family are claiming benefits from the same record, whether you are subject to the Family Maximum Benefit rule…The list goes on.
One thing’s for certain, though. You can’t expect Social Security benefits — either primary benefits or auxiliary benefits, to set you up for decades of living off caviar and champagne.
Social Security is a form of enforced savings and insurance designed to keep older folks out of poverty, not make them rich. It should be part of your retirement plan, not all of it.
Our advice? Start thinking about Social Security and other retirement issues earlier rather than later. That way, you’ll have time to consider your options and discuss them with your family. Taking Social Security benefits early, meaning before full retirement age — or before age 70 if you want to take advantage of Delayed Retirement Credits — doesn’t only reduce your benefits. Remember, it also reduces the survivor benefits that your spouse will be entitled to after you die. If you make a lot more money than your spouse it’s particularly important for you to work out a Social Security strategy.
Consult our retirement planning tool to find out how you should be saving for retirement. With life expectancy on the rise, the risk of some of us outliving our retirement savings is growing. Start strategizing and saving now and you can make sure your golden years really are golden.
One last question: Why is Social Security so complicated?
Sorry — no idea.