Social Security Survivor Benefits: What Happens to Your Social Security Benefit When Your Spouse Dies?

Social Security benefits are generally the largest source of retirement income for seniors aged 65 and older, according to the Social Security Administration. But many Americans misunderstand certain aspects of the retirement program, and knowledge gaps can lead to poor financial decisions.

For instance, Nationwide Retirement Institute says 44% of surveyed adults were unaware that, upon the death of a spouse, the bigger Social Security benefit can be inherited by the surviving partner. But survivor benefits are usually paid from the claim date, not retroactively to the spouse's death, which means the surviving partner could permanently lose income if they fail to apply promptly.

Read on to learn more.

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Understanding Social Security retirement benefits and survivor benefits

Social Security's Old-Age and Survivors Insurance (OASI) Trust Fund pays benefits to three types of individuals: retired workers, spouses, and survivors. The differences are explained below:

Retired-worker benefits depend on lifetime earnings and claiming age. A formula is applied to the inflation-adjusted income from the 35 highest-paid years of work to calculate the primary insurance amount (PIA). The PIA is the payout a worker will receive if they claim Social Security at full retirement age (FRA).

Workers who claim before FRA get a reduced benefit, meaning less than 100% of their PIA. And workers who claim after FRA get an increased benefit, meaning more than 100% of their PIA. The precise amount by which benefits are reduced or increased depends on how many months early or late the individual claims Social Security.

There are two qualifications to those rules. First, eligibility for retirement benefits starts at age 62, which means no one can claim earlier. Second, delayed retirement credits stop accumulating at age 70, which means it never makes sense to claim later.

Spousal benefits allow spouses to claim Social Security on the work record of a retired partner under certain conditions. First, the spouse must be at least 62 years old. Second, the partner on whose record they claim must be receiving Social Security benefits themselves.

Spouses who claim Social Security at FRA will receive a benefit equal to 50% of their retired partner's PIA. Individuals who claim spousal benefits before FRA receive a reduced amount, meaning less than 50% of their retired partner's PIA. The exact reduction depends on how many months early benefits start, but it can be as much as 35%. Importantly, there is no advantage to starting later than FRA because spousal benefits do not earn delayed retirement credits.

Survivor benefits are paid to widows or widowers following the death of their spouse under certain conditions. The survivor must be at least 60 years old, must have been married to the deceased for at least nine months, and must not have remarried before age 60. The survivor benefit will equal the retirement benefit paid to the deceased person if claimed at FRA.

Widows and widowers that claim survivor benefits before FRA receive a reduced payout. The precise reduction depends on how many months early payments begin, but it can be as much as 29%.

Here's what happens to your Social Security benefit when your spouse dies

Married couples usually receive two Social Security checks. The could mean two retired-worker benefits, or one retired-worker benefit and one spousal benefit. Either way, when one spouse passes away, the surviving partner loses one income stream.

Survivor benefits let the widow(er) keep the larger benefit to compensate them for that lost income. If you already receive the larger payout, nothing will change when your spouse dies. But if you receive the smaller payout, you can replace your Social Security benefit with that of your deceased spouse by applying for survivor benefits.

Here's an example: Matt receives a retired-worker benefit of $1,500 per month, and his wife Kate receives a retired-worker benefit of $1,250 per month. If Kate passes away, there is no need for Matt to apply for survivor benefits because he already gets the larger check. But if Matt passes away, Kate will receive $1,500 (in lieu of $1,250) per month if she switches to survivor benefits.

Importantly, whereas spousal benefits equal up to 50% of a retired worker's PIA, survivor benefits equal up to 100% of a retired worker's benefit. That means any delayed retirement credits are passed along to the widow(er). So, the age at which a retiree claims Social Security not only impacts their own benefit, but also impacts the survivor benefit they leave behind for their spouse.

Accordingly, in situations where one spouse is significantly older and has a larger PIA -- meaning their life expectancy is shorter and their baseline benefit is larger -- it may be sensible for that person to delay Social Security until age 70 to ensure their partner receives the largest survivor benefit possible.

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