Claiming SS for deceased spouse

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
User avatar
Topic Author
TomP10
Posts: 238
Joined: Tue Mar 18, 2014 4:13 am

Claiming SS for deceased spouse

Post by TomP10 »

Looking to give some advice to a coworker whose wife died a few months ago. The coworker is age 61 and his wife was 62. The coworker was the higher earner. They have three adult children (the youngest is 25). His current thinking is he will not claim SS on his earnings record until his full retirement age or, if possible, not until age 70.

Any thoughts on his options on drawing SS on his deceased wife's earnings record? In this article by Mike Piper the advice seems to be he is eligible to draw on his deceased wife's SS. Anyone disagree?

Does anyone know about tax consequences of him claiming deceased spouse's SS? Is it treated like regular income? He lives in NJ.

Thanks.
"It is remarkable how much long term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent." -- Charlie Munger
aristotelian
Posts: 12277
Joined: Wed Jan 11, 2017 7:05 pm

Re: Claiming SS for deceased spouse

Post by aristotelian »

Tax on social security depends on the rest of your taxable income situation. I would always advise folks to do a dummy return in Turbotax to see how different choices will affect them.
User avatar
Topic Author
TomP10
Posts: 238
Joined: Tue Mar 18, 2014 4:13 am

Re: Claiming SS for deceased spouse

Post by TomP10 »

I think my main question is whether the widow (age 61) drawing on his deceased wife's SS would have to pay the Earnings Test for social security taxes? If so, it is not clear that there is any benefit to claiming before full retirement age.

For example, suppose he currently makes $60,000/year. That's well above the earnings test cutoff (which is $18,240 in 2020).
"It is remarkable how much long term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent." -- Charlie Munger
Silk McCue
Posts: 8951
Joined: Thu Feb 25, 2016 6:11 pm

Re: Claiming SS for deceased spouse

Post by Silk McCue »

I Googled "ss widow benefits subject to earnings test" and found the following:
Earnings test applies to all types of Social Security benefits, whether you claim on your own work record, as a spouse or as a survivor. Your benefit will increase at your full retirement age to account for benefits withheld due to earlier earnings.Jul 31, 2018
Cheers
User avatar
Topic Author
TomP10
Posts: 238
Joined: Tue Mar 18, 2014 4:13 am

Re: Claiming SS for deceased spouse

Post by TomP10 »

Thanks.
"It is remarkable how much long term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent." -- Charlie Munger
taxman8889
Posts: 1
Joined: Thu Dec 19, 2019 9:55 am

Re: Claiming SS for deceased spouse

Post by taxman8889 »

What to do in this circumstance depends on several of things. First, was his wife already drawing her SS? If so, at his current age of 61, his survivor check will only grow until he hits something like 62 1/2 (82.5%); at that point it will be as large as it will ever get. So, he should probably take it as soon as possible...unless he can't, because of the earnings test. If he can take it, he doesn't have to worry about reducing his own benefit, (which can continue to grow until he's age 70) since widow(ers) are not subject to deeming. However, I would strongly advise getting this in writing when applying at the local SSA office, just to be crystal clear that he's taking his SURVIVOR benefit and not his OWN benefit. This should help avoid nasty and unwelcome surprises later.

He should still be able to take his widow benefit at FRA regardless, as the earnings test goes away at that point. He can then draw it until it disappears, when he starts drawing his own benefit.
User avatar
Artsdoctor
Posts: 6063
Joined: Thu Jun 28, 2012 3:09 pm
Location: Los Angeles, CA

Re: Claiming SS for deceased spouse

Post by Artsdoctor »

TomP10 wrote: Thu Dec 19, 2019 9:22 am I think my main question is whether the widow (age 61) drawing on his deceased wife's SS would have to pay the Earnings Test for social security taxes? If so, it is not clear that there is any benefit to claiming before full retirement age.

For example, suppose he currently makes $60,000/year. That's well above the earnings test cutoff (which is $18,240 in 2020).
He's eligible to receive survivor benefits as early as age 60 but there are caveats. First, the amount of benefit will be reduced compared to the amount he would receive if he waited until his full retirement age (FRA) to start the benefit. The benefit does not increase if he waits to start the benefit after his FRA. Second, if he starts the benefit before his FRA, the benefit will be further reduced based on his income above $17,640 (in 2019). You can see the specifics here:

https://www.ssa.gov/planners/retire/whileworking.html
sbaywriter
Posts: 168
Joined: Wed Mar 30, 2016 10:00 pm

Re: Claiming SS for deceased spouse

Post by sbaywriter »

That link posted above from ssa.gov is really helpful - unless you are mathematically challenged like I am in which case your eyes still glaze over.

So just wanted to point out that I know from personal experience that in some cases you can claim widow benefits before FRA while working and come out ahead, even if you thought the earnings test would just take the money away again. So may be worth double-checking with soc sec in advance of FRA.

As an example, here is my personal experience as a widow still working the year I reached FRA and earning more per year than the earnings test. I turned FRA in April that year. I went to the Soc Sec office in March to apply to start my widow benefits once I reached FRA. The Soc Sec rep asked what I was earning Jan - Mar and pointed out to me that my earnings for Jan - March were less than the earnings test. I had mistakenly thought the test was applied to the earnings for the whole year - no, only to the months before I claimed. Then she said I could claim retroactively starting in January I think. So I was able to collect several months extra widow benefits that I hadn't counted on receiving and it only reduced the monthly benefit slightly for claiming before FRA so I definitely came out ahead.
JGoneRiding
Posts: 1973
Joined: Tue Jul 15, 2014 3:26 pm

Re: Claiming SS for deceased spouse

Post by JGoneRiding »

My back of the envelope math says his wife's benefits need to exceed $1700 a month for him to actually take home any money if he is earning 60k a year.

But he isnt punished for trying to claim it and the SSA will generally do the math for him.
Austintatious
Posts: 878
Joined: Thu Sep 13, 2012 7:01 pm

Re: Claiming SS for deceased spouse

Post by Austintatious »

Here's a current thread discussing filing options for survivor's benefits.

viewtopic.php?f=2&t=297934&newpost=4898613
BigJohn
Posts: 2627
Joined: Wed Apr 02, 2014 11:27 pm

Re: Claiming SS for deceased spouse

Post by BigJohn »

In the same situation as your coworker. I agree with posts that benefit of claiming now depends on the impact of means testing. If there is no benefit to claiming now, I think the right strategy down the road would be to claim his wife’s benefits as soon as he retires and wait to claim his until 70. This is what I did but it assumes he doesn’t need to claim his higher benefit to pay the bills between retirement and age 70.
"The greatest enemy of a good plan is the dream of a perfect plan" - Carl Von Clausewitz
Post Reply