Better Spouse Survivor Options at No Cost for Social Security

After my wife's two sisters died last year within 13 days of each other, I learned something about Social Security benefits that I had never thought about. It eventually impacts all retired SS age married couples. Namely, when a spouse dies, the surviving spouse receives the higher of their two checks and loses the other check.

For example, if one spouse was collecting $1,500 a month from SS and the other spouse another $1,000 per month from SS for a total of $2,500 a month, the survivor then collects $1,500 a month or a 40% decrease in total SS income. When a spouse dies, your mortgage or rent does not go down by 40%. Neither does your car payment, electric and heating bills, insurance rates, gas for your car, cable TV, phone, and Internet service, etc. go down by 40%. Especially for couples whose retirement income is all or mostly SS (pretty common situation), it may be impossible to keep up their standard of living, including keeping their house if they own one.

It doesn't have to be that way. Without any additional SS expense, beneficiaries could be offered the same options prior to collecting SS, that people lucky enough to collect a pension from a private company are given. That is, to determine up front, if your spouse will collect 100% or 75% or 50% or zero percent of your pension when you die. Based on life expectancy tables and your ages, the pension amount received each month is highest at zero percent survivor benefits and lowest at 100% survivor benefits. No matter what decision you make, the lifetime cost to the company for your pension averages out to be the same. Social Security should offer the same options.

In the example I gave, maybe that couple would have chosen to receive a combined $2,200 a month SS benefits instead of $2,500 so that the survivor would continue to receive $2,200 after the first spouse passed away. That likely would have kept his or her standard of living maintainable for the rest of his or her life.

How much will your Social Security benefit go down when your spouse dies? Answer – it will go down 33 to 50 percent. Where two spouses are each collecting the same amount from SS, one spouse's death will result in a 50 percent decline in SS income to the survivor. When one spouse is collecting half of the higher spouse's SS (that is the least amount a spouse can collect), there will be a loss of 33% to SS income when one spouise dies. Everyone else is between the min-max of 33 to 50 percent.