What Happens if Both Spouses Collect Social Security and One Dies?

Social Security benefits provide income protection during retirement, disability, and in the event of a worker’s death. When one spouse dies and both were receiving Social Security, the survivor’s financial landscape changes. Understanding how these benefits transition and the necessary steps is important for maintaining financial stability.

Survivor Benefit Calculation

Upon the death of a spouse, if both were collecting Social Security, the survivor becomes eligible for survivor benefits. The Social Security Administration (SSA) applies a “higher of the two” rule. This means the surviving spouse receives either their own full retirement benefit or the deceased spouse’s full retirement benefit, whichever is greater, but not both. This ensures the survivor receives the most advantageous benefit, providing continuity of income based on the higher earner’s record.

Survivor benefits are calculated based on the deceased worker’s Primary Insurance Amount (PIA). The PIA represents the monthly benefit the deceased would have received at their full retirement age (FRA). This amount is derived from the deceased worker’s average indexed monthly earnings (AIME), calculated using their 35 highest-earning years. The SSA uses a progressive formula with “bend points” to determine the PIA.

Several factors influence the final survivor benefit amount. If the deceased spouse claimed benefits before their full retirement age, their benefit was permanently reduced, affecting the survivor’s potential benefit. Conversely, if the deceased spouse delayed claiming benefits past their FRA, their benefit amount increased due to delayed retirement credits, forming the basis for the survivor benefit. The surviving spouse’s age when they claim survivor benefits also plays a significant role.

A surviving spouse who has reached their full retirement age can generally receive 100% of the deceased worker’s PIA or the amount the deceased was receiving at death, whichever is higher. If the surviving spouse claims benefits between age 60 and their FRA, the benefit amount will be reduced (approximately 71% to 99% of the deceased’s benefit). If the surviving spouse is caring for the deceased’s child under age 16 or with a disability, they may receive 75% of the deceased worker’s benefit regardless of their own age.

If the surviving spouse was already receiving a spousal benefit based on the deceased’s record, the SSA converts this to a survivor benefit. The SSA automatically switches to the higher of the two benefits. If the surviving spouse’s own retirement benefit is higher than the potential survivor benefit, they will continue to receive their own benefit.

Steps to Apply

Applying for Social Security survivor benefits requires specific documentation. The Social Security Administration (SSA) needs proof of the deceased worker’s death, typically a death certificate or a statement from a funeral home. The Social Security numbers of both the deceased worker and the surviving spouse are required. To verify identity and relationship, the surviving spouse’s birth certificate and marriage certificate are necessary.

Additional documents may include the deceased worker’s W-2 forms or federal self-employment tax returns for the most recent year, which help the SSA verify earnings. For direct deposit, bank account information, such as the account and routing number, is needed. The SSA advises against delaying the application if some items are missing, as they can assist in obtaining necessary information.

Surviving spouses cannot apply for survivor benefits online. Applications must be made either by phone or in person at a Social Security office. To apply by phone, individuals can call the SSA’s national toll-free number to schedule an appointment. In-person applications can be made by visiting a local Social Security office, often by scheduling an appointment in advance to reduce wait times.

After submitting the application, the SSA processes the claim, verifying information and calculating the benefit amount. Processing times vary, ranging from 30 to 60 days. During busy periods or if complications arise, processing may extend to 8 to 12 weeks. Some claims, particularly those where benefits are due immediately, may be processed within 14 days.

Once the application is approved, benefits are paid retroactively from the eligibility date. This means the surviving spouse receives payments for the period they were eligible, even if processing took longer. The SSA notifies the applicant of the decision and benefit amount. Updates on claim status can be obtained by contacting the SSA after a few weeks.

Related Financial Considerations

The transition to survivor benefits impacts a surviving spouse’s overall financial situation beyond the direct benefit amount. A significant consideration is how the change in Social Security income affects federal income tax liability. Social Security survivor benefits are subject to federal income tax, similar to other Social Security benefits. The amount of taxable benefits depends on the recipient’s “combined income” and their tax filing status.

Combined income is calculated by adding one-half of Social Security benefits to the individual’s adjusted gross income and any tax-exempt interest. For an individual filing as single, head of household, or qualifying surviving spouse, if combined income is between $25,000 and $34,000, up to 50% of benefits may be taxable. If combined income exceeds $34,000, up to 85% of benefits may be taxable. For married couples filing jointly, these thresholds are $32,000 and $44,000.

If the surviving spouse was receiving a spousal benefit based on their deceased partner’s record, the SSA automatically converts this to a survivor benefit. This conversion does not require a new application for the monthly benefit itself, though a separate application for the one-time lump sum death payment of $255 is necessary. The survivor benefit will be the higher of the two benefits, replacing the prior spousal benefit amount.

A surviving spouse receiving their own retirement benefit can also transition to a survivor benefit if the latter is higher. The SSA does not allow individuals to receive both their own retirement benefit and a survivor benefit simultaneously. Instead, the SSA pays the higher of the two amounts. This means total Social Security income may increase if the deceased’s benefit was larger, but they will not receive two separate checks.

Understanding these financial intricacies helps the surviving spouse plan their budget and manage income tax obligations. Factor in potential changes to overall taxable income and adjust financial planning accordingly. This includes evaluating how the new benefit amount interacts with other income sources, such as pensions or investments.