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Baby Boomers - Don't Leave Money on the Table. Part IV: Survivors Benefits

Your death will have a devastating impact on your family in many ways. If you are the major breadwinner, your loved ones must deal with the loss of your income at a time when they are least able to cope. Understanding the Social Security survivor's benefits rules now is an important part of retirement planning and can make this transition less painful.  Most people are aware that when they die, their surviving spouse will be eligible for Social Security survivor's benefits. Few realize that their dependent and disabled children, their dependent parents, and their former spouses may be eligible for survivor's benefits. Some of these benefits are listed on your Social Security statement and your spouse's statement, which you can find at http://www.ssa.gov/myaccount.   Following is a more detailed explanation of the benefits that are available for your eligible dependents. 

Your surviving spouse may collect your full benefit, based on your earnings, if he or she files for benefits at full retirement age, which is currently age 66). Your full benefit is the amount you would have collected if you filed for benefits at age 66. It doesn't matter when you actually started collecting benefits. If you were entitled to collect $2,000/month if you filed at age 66, your spouse's survivor's benefit will be the same. Your spouse may start to collect survivors benefits as early as age 60, but his or her benefits will be reduced. At age 60, his or her survivors benefit will be reduced by about 28.5%, providing a benefit of $1,430/month. At age 62, his or her benefit will reduced by about 19%, for a benefit of $1,620/month. Your spouse may collect the survivor's benefit or his or her own benefit, whichever is more, but not both at the same time. He or she may switch to his or her own benefit as early as age 62, if that would provide more income. Your spouse can maximize his or her benefit by studying both your benefit statement and his or her benefit statement to determine what type of benefits will pay the most, the best time to file for these benefits, and if it makes sense to switch from survivor benefits to his or her own benefit. If your surviving spouse is disabled, he or she may collect survivors benefits as early as age 50. Your former spouse is entitled to survivor's benefit, based on your earnings, as long as you were married to your former spouse for at least ten years, he or she has not remarried, and is not collecting his or her own benefit.

Your unmarried children under the age of 18 (or up to age 19 if they attend elementary or secondary school full time) are eligible to collect benefits. Each child's benefit will be 75% of your benefit at full retirement age. If your benefit at age 66 would have been $2,000/month, each eligible child is entitled to collect $1,500/month. If your child is receiving survivor's benefits and is younger than age 16 or is disabled, your surviving spouse may collect the same amount that each eligible child is collecting, but the maximum amount of survivors benefits that your family may collect in 2015 is $3,835/month. If your child was disabled before age 22 and remains disabled at the time of your death, he or she may collect survivors benefits at any age. If you have been supporting your parent(s) by paying at least one-half of their living expenses, your dependent parent(s) may collect survivor's benefits if they are 62 or older.

The rules governing the survivor's benefits payable to your surviving spouse, your eligible children, your spouse who is caring for eligible children, your former spouse, and your dependent parents are complicated.   But after the death of a spouse, or a parent or child who is supporting you, you should schedule a visit to your local Social Security Office to review your options before you file for benefits.

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