Social Security Secrets: Breaking Down Survivor Benefits

Survivor Benefits have always seemed pretty straight forward.

Calculating the amount that the surviving spouse will receive from the SSA (Social Security Administration) is easy, right?

Typically, the widow/widower is entitled to 100% of what their deceased spouse – including any DRCs (Delayed Retirement Credits) – was receiving at the time of their death.

Well, that’s what I thought…

Recently, I was working with an advisor on a unique Social Security scenario. I discovered that this is not always the case.

After three years of leading support for LifeYield Social Security Advantage, I’ve ran thousands of different scenarios through the software. But this one was different. It required a lot of extra research and a detailed understanding of the rules to confirm the findings. But confirm, it did.

Here’s what happened.

A unique Social Security situation

The clients are a husband and wife who both filed for their retirement benefits as early as possible, at 62 years old. The husband – let’s call him John – was receiving a reduced benefit due to filing early. Unfortunately, he ended up passing at age 75.

Once his wife – we’ll call her Jane – filed for Survivor Benefits, LifeYield suggested that she receive a benefit amount much higher than what John was getting from the SSA when he died. I’d never experienced a case like this before, where our calculations were suggesting an amount that was higher than the deceased’s benefit amount.

So, I troubleshooted.

First, I took a deep dive into the Survivor benefit calculations. I wanted to determine why this would be the case for Jane and why my normal formulas for Survivor Benefits weren’t resulting in the same answer as the software.

I knew that I’d need to take this case a step further. Coincidentally, I’m in the middle of studying for an exam that would allow me to become certified in providing Social Security advice.

I have to admit – after college, I thought I was done with textbooks. But this textbook had the answer I needed.

When your Social Security case is different from all others

After a deep dive, I discovered that the reason the tool was suggesting this was because the SSA determines Survivor benefits uniquely in a case like this.

When both claimants file early – where one spouse is past her Survivor FRA at the time of her husband’s death –­ the SSA will pay her the higher of the following benefits: 100% of what her husband was receiving at the time of his death OR 82.5% of his PIA (primary insurance amount).

This is why the tool was estimating that Jane receives a higher Survivor monthly benefit. She should receive John’s PIA amount from age 73 onward.

The software never lies.

It’s cases like these that prove that Social Security is never the exact same for any two client cases. Using an optimization tool like Social Security Advantage is the best way to ensure you can find the right filing strategy for every scenario.