Social Security Has A Death Benefit
Most people don’t realize that a portion of every paycheck not only goes to social security, but they are also paying some towards survivors insurance. If you currently have life insurance, the value of your private policy could potentially be less than the value of the survivors insurance you have under social security. (Source: SSA.gov)
We don’t like talking about death, but if something were to happen to you, it would help to know that social security may be able help take care of your family or spouse.
When you die, benefits can be paid to the worker’s children and the surviving spouse who is caring for the children. It is calculated on earned credits by the worker and can be very beneficial to the care of your family. There are age limits, such as when children reach the age of 18, the benefit stops but the SSA is very helpful and will walk you through the process.
The other death benefit is not as well planned for. This is the benefit when a spouse dies. When a higher-earning spouse dies, the surviving spouse starts receiving a widow’s benefit that is 100% of the deceased spouse’s social security benefit. That’s a good reason for the higher earning spouse to wait until age 70 to start collecting benefits. This creates an annuity-like payment at a higher rate with an inflation clause linked one-to-one to the Consumer Price Index.
There are age requirements around this benefit as well, such as the amount will be reduced by a small amount for each month before the widow reaches retirement age (if the widow was younger than the spouse at death).
Strategies for when to start or how to defer social security payments should be part of everyone’s retirement plan. There are several ways to maximize your social security payment. They don’t work for everyone and their particular situations, but you should be asking the questions to see if they might work for you to maximize your payout.