Retirement Answers

Hello, and welcome back to Retirement Answers. This is Jacob Duke, and I'm a certified financial planner based in Little Rock, Arkansas. I appreciate you tuning into today's show. I've got a really good question for you. That's one actually a client of mine brought up and his name is Jim.

And he has a question around for benefits for his wife if something were to happen to him. And the question is really built around what if he's not already taking his own benefit whenever he passes? What happens to the survivor benefit for his wife, and how much is she actually entitled to receive? So we're gonna dive into that here today on the show. So just a a little bit of background for you really quickly.

Remember, survivor benefits are different from spousal benefits. Spousal benefits are what you are entitled to while your spouse is living. Survivor benefits is what you're entitled to after your spouse passes away. So that is the difference between them. They're they're different calculations to get the results of each one, So that's something that we have to pay attention to.

But in our case today, we're looking at strictly survivor benefits. So Jim has a question around what happens if I pass away before I actually begin taking mine. Okay. So let's take a look at this. So there are a few different things we have to look at.

First of all, we have to we have to know who is actually entitled to a survivor benefit. And so there's four categories of people. You need to be at least age 60 to receive a survivor benefit or age 50 if you're disabled in some way. You need to be single. You cannot be remarried, right?

You need to have been married at least nine months before your spouse passed away, so that's less than a year. If you had just married this person and then nine months and a day later they passed away, technically you're entitled to the survivor benefit of that person because they were your current spouse. Or if you are if you were married to someone previously for at least ten years and they're your ex spouse now, you're technically entitled to their survivor benefit whenever they pass, so long as you are married to them for at least ten years. So those are the four kind of stipulations we have to pay attention to, to know who is entitled to a survivor benefit. Now, the question that Jim has presented is primarily around what happens to the benefit if he's not taking his yet, right?

So let's look at four different kind of scenarios really quickly. So let's say that Jim was actually taking his benefit and, he he began taking it on or after his full retirement age. Okay? So he was in this case, we're gonna assume his FRA is 67. So let's let's say that he began taking it at 67.

Whatever he was receiving at the time of his death is what the spouse would begin receiving as the survivor benefit. Okay? So there's no increase. There's no reduction. It is whatever Jim was receiving at the time of his death, that is what the spouse began receiving assuming that he had already begun taking his at full retirement age or after full retirement age.

Now, what if he took his benefits before full retirement age? Well, technically, you are entitled as a spouse, as a survivor, you're entitled to receive what your spouse was receiving or 82.5% of your deceased spouse full retirement age benefit. Okay. So let's break that down. Let's say Jim took his benefit before 67.

Let's say he took it at 65. Well, his spouse is entitled to receive what he was receiving at the time of his death, right, because he would have received a reduced amount by taking it at 65 rather than 67. She's entitled to either take that or she could take 82.5% of whatever he would have received at 67. So depending on which is higher, that's the one she would get there. So let's say, for example, Jim's benefit at 67 was gonna be $3,000 He took it at 65 and he only got 2,500.

Well, 82.5% of 3,000 is still less than 2,500. Right? So technically the spouse would begin receiving just whatever benefit he was taking at the time. So, that's a couple scenarios of what would happen if he had already been receiving his benefit. Now, let's look at what happens if he was not receiving his benefit.

Let's say he had not filed for his benefits at all and he passed away before his full retirement age. Technically, you are entitled to receive the deceased's full benefit at their full retirement age, okay? So, that's what you were entitled to receive. But a couple things we have to look at. We have to also look at your age as a survivor.

If you're age 62 and they were 67, you know, being of full retirement age and they pass at 67 and you were 62, well, you're gonna receive a reduced amount of what he would have received at his full retirement age, right? And so, that would be going down to around 80 ish percent of whatever he would have gotten if you're age 62 right now, and, you began taking that survivor benefit, you would receive somewhere around 80% of what he would have gotten at his full retirement age. So, that is something to pay attention to. Now, one thing to know is you can actually delay taking the survivor benefit. You do not have to begin receiving it.

You can delay it into the future and actually continue to let that grow a little bit so you don't take a reduction in the amount that you are actually receiving. Because every year that you delay, the amount that you would get of your spouse's full retirement age benefit increases by a little bit, right? So every year you push that off, it goes up by a little bit more. Now, let's say that, your spouse had not taken it and it was after full retirement age. So, let's say Jim was 68 when he passed and he was still not taking it because he wanted to delay until 70.

Well, the spouse would begin receiving whatever the benefit would have been if he had filed the date of his death. So, obviously, there are little extra credits being, added on to his benefit by delaying it into the future. And so, you would just begin receiving whatever benefit he would have received if he had filed the day he passed. So, there's no benefit to delaying the survivor benefits past the full retirement age. It is only a benefit if you personally are under your full retirement age.

That's whenever it is perhaps beneficial to delay taking the survivor benefit until you are of full retirement age, and then you can begin receiving the full benefit that your spouse would have received at age 67. So, that's a lot of information, and it's really confusing. Just know that you have to be age 60 or age 50 if you're disabled. You need to be single. You cannot be remarried yet.

You also had to have been married at least nine months, to receive that spousal benefit. And you also, if it's an ex spouse, you needed to be married to them for at least ten years to be able to claim a survivor benefit. So those are the main things that we have to pay attention to in terms of do you qualify for survivor benefits, and then those are the different scenarios in which you might have to navigate, you know, if and when a spouse passes. You need to know these different things. That way you know what to claim, how to claim, what you're technically entitled to, and different things like that.

So I hope this has been helpful answering some of your questions. There's obviously a lot more here that we could dig into and kinda really get into the weeds, but this is just a surface level, just kinda intro into what to expect if, you know, going back to Jim's question, if Jim would pass and he is not taking his benefit, this is what his spouse would be entitled to and how that would work. And so hopefully, this has been somewhat insightful for you and answers a question maybe you or someone else you know has had. And once again, you've been listening to Retirement Answers. My name is Jacob Duke.

I look forward to talking with you next week.