Ask the Experts – July 20, 2015

Question: If my client receives Social Security survivor benefits from her deceased spouse and then gets re-married, is she still eligible for the survivor benefits?

Answer: It depends.

If your client re-marries before age 60, she cannot receive survivor benefits as a surviving spouse while married. If, however, remarriage occurs after age 60, the client will continue to qualify for benefits on her deceased spouse’s Social Security record.

If the client re-marries after 60 and stays married long enough to become eligible for spousal benefits, she may be eligible for three types of benefits: one based on the deceased spouse’s record, another based on the new spouse’s record and the third based on her own record. While she may be eligible for three different types of benefits, the Social Security Administration will generally pay ONLY whichever benefit is the highest.

Your client may be able to collect a certain type of benefit now and then switch to a higher benefit later.

Ask the Experts – July 10, 2014

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers. Here’s the question of the day.

Question: If my client files for early Social Security retirement benefits at age 62, will she receive a reduced survivors benefit if her husband predeceases her?

Answer: No. The fact that your client files early for her own retirement benefits does not affect her potential future survivors benefits. In other words, an individual can file for her own benefits at age 62 and switch to survivor benefits after her spouse’s death after she reaches full retirement age (FRA) without seeing a reduction in survivors benefits.

A surviving spouse generally receives the amount the deceased spouse was receiving from his own Social Security benefits at the time of his death. If the deceased spouse was receiving reduced benefits, the survivors benefit is based on that reduced amount. Conversely, any delayed retirement credits (DRCs) accumulated by the deceased spouse will increase the survivors benefits.

On the other hand, if a surviving spouse files for survivors benefits prior to FRA, her survivors benefits will be reduced; however, filing for her own retirement benefits before FRA has no effect on her survivors benefits.

Here’s an example. Wife’s FRA is 66, and she has earned a primary insurance amount (PIA) of $800 per month. She files for benefits at age 62, receiving $600 per month ($800 PIA reduced by 25% early retirement reduction). Husband’s FRA is 66, and he has earned a primary insurance amount of $2,000 per month. He files for his own benefits at age 70, receiving $2,640 per month ($2,000 PIA increased by 32% DRCs). If the husband dies and the wife has reached FRA, she will be entitled to $2,640 in survivors benefits (replacing her own benefit amount of $600 per month).

Have a question for the professionals at AUC? Feel welcome to submit it by email. We may post your question and the answer as the question of the day.

Ask the Experts – June 9, 2014

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers. Here’s the question of the day.

Question: Can my client file for survivors benefits now, at age 64, and switch to her own retirement benefits later at age 70, earning delayed retirement credits (DRCs)?

Answer: Yes, a surviving spouse may file for survivor benefits at age 64 and switch to her own benefits later.

This allows her to receive her survivor benefits immediately without it adversely affecting her own future retirement benefits, even if she hasn’t yet reached full retirement age. Keep in mind, however, that since she has yet to reach full retirement age (FRA), the survivor benefits would permanently be reduced. But this wouldn’t be much of an issue if she’s planning on switching over to her own retirement benefits at age 70.

This technique allows the surviving spouse access to Social Security funds now—the survivor benefits—while allowing her to continue to earn DRCs, increasing her own Social Security retirement benefits by 8% per year until she reaches age 70.

This technique is similar to the restricted spousal benefit technique, which we discussed here and here. However, to receive spousal benefits now and switch to your own benefits later, the spouse must have already reached FRA, which isn’t a requirement for the survivors switch technique discussed in this entry.

Have a question for the professionals at AUC? Feel welcome to submit it by email. We may post your question and the answer as the question of the day.