Living on SS..anybody else?

[ShokWaveRider]

A couple of SS questions for the experienced. Somewhat related to post and very relevant to some.

1) If one spouse dies, does the surviving spouse get the higher of the 2 SS payments, assuming the survivor and deceased are at or over FRA?

2) Assuming the spouse that died waited till 70 to get SS, does the survivor get the deceased spouse's 70 based SS, or does it drop to what it would have been at the Deceased spouses FRA?

Thanks

 

[Kimdon1110]

A couple of SS questions for the experienced. Somewhat related to post and very relevant to some.

1) If one spouse dies, does the surviving spouse get the higher of the 2 SS payments, assuming the survivor and deceased are at or over FRA?

2) Assuming the spouse that died waited till 70 to get SS, does the survivor get the deceased spouse's 70 based SS, or does it drop to what it would have been at the Deceased spouses FRA?

Thanks

1. Yes

2. Yes, the age 70 benefit if that’s what the deceased filed on.

 

[street]

Just curious what happens to your annual income when there is one surviving spouse? If only 8400 is pension and that carries on, is one of your SS significantly higher than the other so the survivor won’t take a big hit?

We have had threads in the past that people here could live without SS. A large percentage of people don't take their SS till 70. That tells me they most likely could live without SS because they already have not needed it for 8 plus already.
The longer we all wait to take SS the higher the chance one of the couples will pass sooner than later. So, we will all face a time living off of one SS check.
When to take SS is a crap shoot and to get most and the longest all depends on longevity of the couple.
I also think it would cost somewhat less for one to live than for two. Maybe not much but expenses could go down and some belt tightening may have to happen with one surviving if their finances require to do so.

 

[Gumby]

As I have posted on here before, a general rule of thumb is that the cost to run a household is proportional to the square root of the number of people in it. So, assume that it costs 1 person $1000 per month to live, then it will cost 2 people living together about $1414, a family of 3 about $1732 and a family of 4 about $2000. And to look at it from the reverse angle, if 2 people can live on $1000, 1 person can live on $707. ​Since we're talking about social security, I think we can safely ignore everything but the 1 person versus 2 person household.

Let's throw out the edge cases and special situations** and say that we have a couple living solely on social security. She gets $X per month of social security based on her work record and he gets 1/2 of her $X as a spousal benefit. When either one of them dies, the survivor will get $X per month -- that is, if he dies first, she will just continue on with her own social security of $X per month, and if she dies first, he will switch from his 1/2 of $X spousal benefit to the $X per month survivor benefit. In either case, the survivor will be left with 67% of their prior combined social security. (1/1.5). So it will be close (67% versus 71%) to what one would expect the survivor's reduced living expenses would be. So, yes, a little belt tightening may be in order.

Of course, one could be in a couple where both partners get social security on their own record, because the second partner's own social security is more than the spousal benefit. In that case, when one partner dies, the reduction in household income would be more than 33%. I believe that the worst case is where both partners each get the same social security based on their own records. In that case, the household income will drop by 50% when one of them dies (from 2 $X to $X per month). A much more difficult accommodation may be necessary.

What this points out is the importance of modeling out what happens to the survivor when making retirement plans. The reduction in social security income will range from 33% to 50% upon death of one partner.



* In my own case, the young wife is not entitled to any own social security based on her own record (because she never paid into SS) and, due to the GPO, will not receive a survivor benefit based on my social security. So, when I predecease her, as is the more likely scenario, household social security income will drop by 100%. I have taken that into account in my plan with a paid up whole life policy.

 

[street]

Gumby, you pointed out another benefit for Life Insurance. I see other threads on the Life Insurance and how many drop them don't have them. Tax free huge amount of at death can be a life saver for many couples when one passes on. A policy isn't for everyone but has huge benefits for families.

 

[Out of Steam]

Out of steam, I am actually doing fine after 7 months. I have a very small mortgage and love my condo. I have made friends in my building that enjoy playing games, having dinner and going places. I also still have all my old friends so am busy. I have another good friend that loves to travel so have a travel partner. We are going to Ireland in June. I spend on what’s important to me and don’t have any expensive hobbies.

Glad things are going well. It seems to be that our members are fairly cautious, and things turn out well even if we worry about them.

 

[flyingaway]

As I have posted on here before, a general rule of thumb is that the cost to run a household is proportional to the square root of the number of people in it. So, assume that it costs 1 person $1000 per month to live, then it will cost 2 people living together about $1414, a family of 3 about $1732 and a family of 4 about $2000. And to look at it from the reverse angle, if 2 people can live on $1000, 1 person can live on $707. ​Since we're talking about social security, I think we can safely ignore everything but the 1 person versus 2 person household.

Let's throw out the edge cases and special situations** and say that we have a couple living solely on social security. She gets $X per month of social security based on her work record and he gets 1/2 of her $X as a spousal benefit. When either one of them dies, the survivor will get $X per month -- that is, if he dies first, she will just continue on with her own social security of $X per month, and if she dies first, he will switch from his 1/2 of $X spousal benefit to the $X per month survivor benefit. In either case, the survivor will be left with 67% of their prior combined social security. (1/1.5). So it will be close (67% versus 71%) to what one would expect the survivor's reduced living expenses would be. So, yes, a little belt tightening may be in order.

Of course, one could be in a couple where both partners get social security on their own record, because the second partner's own social security is more than the spousal benefit. In that case, when one partner dies, the reduction in household income would be more than 33%. I believe that the worst case is where both partners each get the same social security based on their own records. In that case, the household income will drop by 50% when one of them dies (from 2 $X to $X per month). A much more difficult accommodation may be necessary.

What this points out is the importance of modeling out what happens to the survivor when making retirement plans. The reduction in social security income will range from 33% to 50% upon death of one partner.



* In my own case, the young wife is not entitled to any own social security based on her own record (because she never paid into SS) and, due to the GPO, will not receive a survivor benefit based on my social security. So, when I predecease her, as is the more likely scenario, household social security income will drop by 100%. I have taken that into account in my plan with a paid up whole life policy.

Why could not your wife take your social security if you die first?

 

[RetiredHappy]

Why could not your wife take your social security if you die first?

Government Pension Offset - no double dipping in layperson's term.

 

[ShokWaveRider]

There is just 2 of us and we spend ~$1,539 just for housing, insurance, Taxes & Utilities. No food, no nothing else. We spend more like ~$2,500 for basics with no discretional spending like vacations, home maintenance etc.

 

[Gumby]

Why could not your wife take your social security if you die first?

Government Pension Offset - no double dipping in layperson's term.

To elaborate, the Governmental Pension Offset (GPO) provides that if you worked in a job for which you didn't pay into social security and for which you get a governmental pension (in many states, public school teachers were excluded from social security when it was new) then part of your pension is offset against any spousal or survivor benefit you would receive from your spouse. In our case, the young wife's pension is large enough compared to my social security that the GPO offset wipes out spousal/survivor benefits completely.

I find it very unfair to me. Why? Because in the normal course of events, I pay for two things when I pay social security premiums: 1) an old age benefit for me and 2) an insurance policy that will pay out to my wife when I die. Now consider the case where my neighbor and I pay exactly the same social security premiums over the course of our careers. The only difference between us is that his wife, who is a trust fund baby, did not ever work and so never paid into social security. My wife worked as a teacher for 30 wears and never paid into social security. When my neighbor and I die, his wife gets his social security continued for the remainder of her life. My wife gets nothing. But he and I paid exactly the same premium. I am forced to buy a private life insurance policy to make up for the loss of income to her when I die.

I can see some sense in an adjustment with respect to the spousal benefit, because you get either the larger of your own or half of your spouse's, but not both. So there may be a sense of double dipping there. But I can see no justification for eliminating the survivor benefit.

 

[Music Lover]

My wife worked as a teacher for 30 wears and never paid into social security. When my neighbor and I die, his wife gets his social security continued for the remainder of her life. My wife gets nothing. But he and I paid exactly the same premium. I am forced to buy a private life insurance policy to make up for the loss of income to her when I die.

Single people also pay the same premium and can't designate a beneficiary.

 

[RetiredHappy]

I find it very unfair to me. Why? Because in the normal course of events, I pay for two things when I pay social security premiums: 1) an old age benefit for me and 2) an insurance policy that will pay out to my wife when I die. Now consider the case where my neighbor and I pay exactly the same social security premiums over the course of our careers. The only difference between us is that his wife, who is a trust fund baby, did not ever work and so never paid into social security. My wife worked as a teacher for 30 wears and never paid into social security. When my neighbor and I die, his wife gets his social security continued for the remainder of her life. My wife gets nothing. But he and I paid exactly the same premium. I am forced to buy a private life insurance policy to make up for the loss of income to her when I die.

I can see some sense in an adjustment with respect to the spousal benefit, because you get either the larger of your own or half of your spouse's, but not both. So there may be a sense of double dipping there. But I can see no justification for eliminating the survivor benefit.

Ah... where do we draw the line of fairness? Both equal earners who paid into SS, one not as a dependent of another and hence no spousal or death benefits.

 

[Gumby]

Ah... where do we draw the line of fairness? Both equal earners who paid into SS, one not as a dependent of another and hence no spousal or death benefits.

Okay. If you like, I'm willing to go with zero spousal or survivor benefits for everyone. That would be fair and equal. You pay into SS, you get something based solely on what you, personally, paid in. You don't pay in at all - for whatever reason - you don't.

 

[RetiredHappy]

Okay. If you like, I'm willing to go with zero spousal or survivor benefits for everyone. That would be fair and equal. You pay into SS, you get something based solely on what you, personally, paid in. You don't pay in at all - for whatever reason - you don't.

I agree except for the poor surviving spouse who never worked and have no other means of income.

 

[Walt34]

I agree except for the poor surviving spouse who never worked and have no other means of income.

And that right there is the sole reason the non-working surviving spouse gets survivor benefits.

As the saying goes "Life ain't fair".

 

[Gumby]

I agree except for the poor surviving spouse who never worked and have no other means of income.

And whose fault is it that they did not work?

 

[RetiredHappy]

And whose fault is it that they did not work?

You and I are on the same page, but we don't rule the world.

 

[Gumby]

Yes, their spouse who did work and contribute to SS should have obtained insurance, just as I am forced to do.

 

[RetiredHappy]

Yes, their spouse who did work and contribute to SS should have obtained insurance, just as I am forced to do.

That would certainly be a step towards resolving SS solvency.

 

[tmm99]

Talking about inequality/unfairness, etc, how about this - My DH never worked in the US. In fact, he never even lived in the US, but just because he's married to me, he is entitled to half of what I'll get. And we've only been married for a few years. He's entitled to the survivorship benefits as well. (I just found this out last month - I was shocked.)

 

[RetiredHappy]

Talking about inequality/unfairness, etc, how about this - My DH never worked in the US. In fact, he never even lived in the US, but just because he's married to me, he is entitled to half of what I'll get. And we've only been married for a few years. He's entitled to the survivorship benefits as well. (I just found this out last month - I was shocked.)

Be careful, some of us are throwing stones at him!

 

[tmm99]

Be careful, some of us are throwing stones at him!

Even to my thinking, it is unfair, although we can benefit from this...

 

[almosttime]

Okay. If you like, I'm willing to go with zero spousal or survivor benefits for everyone. That would be fair and equal. You pay into SS, you get something based solely on what you, personally, paid in. You don't pay in at all - for whatever reason - you don't.

My thoughts exactly. The GPO and WEP are unfair to those of us involved. The folks in Washington (DC), have a two proposals floating around, again, to either do away with one or both, or refigure the calculation.

 

[Irishgirlyc58]

I agree except for the poor surviving spouse who never worked and have no other means of income.

Who never worked-outside of the home.
I believe the presumption is that the spouse who doesn’t have any work history took care of the kids and household chores. When the survivors benefits were implemented this was predominantly the female. Many women were left destitute when their husbands passed away.

Now I’m single and fall under WEP so I understand how inequitable these rules can be but there was logic behind them when implemented. It’s just that times have changed-drastically and our laws just don’t keep up.

 

[aja8888]

Talking about inequality/unfairness, etc, how about this - My DH never worked in the US. In fact, he never even lived in the US, but just because he's married to me, he is entitled to half of what I'll get. And we've only been married for a few years. He's entitled to the survivorship benefits as well. (I just found this out last month - I was shocked.)

It's all part of the great giveaway program here in the good old USA!