The Social Security Death Benefits You Need to Know About

By Dan Caplinger Markets Fool.com

SocialSecurity offers surviving family members two types of benefits when someone dies. The official Social Security death benefit is just a small one-time $255 payment. But Social Security's survivor benefits are much more important, providing family members with monthly payments that in some cases last the rest of their lives.

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How can you get a $255 Social Security death benefit?

If you're a surviving spouse or child, you can receive a $255 lump-sum death benefit if you meet certain eligibility requirements. A surviving spouse who was living in the same household with the worker when the worker died automatically gets the death benefit. Even if they were living apart, the surviving spouse can still get a payment if he or she was already getting benefits on the worker's work record or became eligible to do so when the worker died.

If no spouse is eligible for the death benefit, a child can get it if he or she was receiving benefits on the worker's record or became eligible to do so at the worker's death. If no one qualifies to receive the payment, then the death benefit goes unpaid.

Qualified recipients who are already getting benefits will typically receive the death benefit automatically. Those who aren't receiving benefits right now need to apply for the payment within two years of the date of death.

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Why survivor benefits are much more important

The official Social Security death benefit is just a token payment a family member can receive. By contrast, the survivor benefits that take effect at a loved one's death are substantial and last a lot longer. For survivor benefits to take effect, the deceased worker must have worked long enough to earn a certain number of Social Security credits. That number varies depending on the age of the worker at death, ranging from as few as six to as many as 40.

For surviving spouses, survivor benefits are often a financial lifeline. To qualify, the spouses must have been married for at least nine months prior to death, with exceptions applying for those who have children together or in cases of accidental death or death during military duty. Benefits can typically kick in once a surviving spouse reaches age 60, and younger spouses can also get survivor benefits if they're caring for a child who is under the age of 16. For those spouses who qualify based on a child, benefits stop once the child reaches 16, but then start up again when the spouse chooses to take them after turning 60.

Children can also be eligible for survivor benefits. To qualify, the child must be under 18, or in high school and no older than 19. Children who aren't disabled stop getting benefits once they no longer qualify due to age. However, disabled children have no age limit, as long as they became disabled before turning 22.

Even divorced spouses can get survivor benefits if they qualify. The spouses must have been married for at least 10 years, and the surviving spouse must not have remarried before reaching age 60.

How much will Social Security pay in survivor benefits?

Survivor benefits are based on the retirement benefit that the deceased worker either already received or would have received at retirement. The base amount is determined taking into account any addition to or subtraction from the worker's benefit resulting from the age at which the worker claimed Social Security. So if the deceased worker claimed Social Security early at age 62, then the base amount will be less than if the worker had waited until full retirement age.

Once that base amount is determined, Social Security applies any reduction based on the surviving spouse's timing of when to claim benefits. Those who wait until full retirement age get the full base amount, but if survivors claim early, then reductions apply. A 28.5% reduction applies to those who take benefits at 60, so if you would have gotten $1,000 per month at full retirement age, you'd only get $715 per month in survivor benefits if you take them starting at age 60.

Spouses who haven't yet turned 60 but are caring for a child under 16 get 75% of the base amount of the worker's benefit. Eligible child survivors also get 75%, subject to a maximum total family amount that typically ranges from 150% to 180% of the worker's base amount.

One key element of survivor benefits is that you can file for them independently from your own retirement benefit. Once you've applied for both, you won't get the sum of both -- instead, you're only entitled to receive whichever is larger. But one lucrative strategy can be to take either your own benefit or your survivor benefit early, and then change to a larger benefit later on. That way, you can get the best of both worlds.

How to learn more about Social Security death benefits

The Social Security Administration website has more information about both of these benefits. There is a page that talks about the Social Security death benefit, while survivor benefits are discussed here. There, you'll get more detailed information about how to qualify, how much you'll receive, and how you can apply online for benefits.

Social Security's benefits after death provide financial security to your loved ones. By knowing how they work, you'll be in a better position to manage your finances no matter what happens.

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