You may be eligible for Social Security even if you’re not retired
Here’s what you need to know about spousal and survivor benefits.
Caitlin Cahalan– Oct 16, 2024 9:33 PM EDT
Like many government benefits, Social Security can seem daunting and confusing. Lack of information and understanding can prevent Americans of all ages from effectively planning for their future by leaving money on the table.
Social Security benefits are not just for retirees. Children, divorced spouses, and people with disabilities are entitled to receive Social Security payments if they meet the criteria.
As of August 2024, 2.5 million Americans receive spousal benefits, and over 5.5 million receive survivor benefits.
Unpacking the ambiguity around who is eligible for spousal and survivor Social Security benefits, how much they can receive, and the best age to start collecting benefits can help people fully utilize the government benefits they’re entitled to.
Spousal and survivor benefits are nuanced
While some Americans know that spouses of a Social Security recipient are also eligible for a Social Security payment, many don’t know how much they’re entitled to receive. The rules surrounding survivor benefits can be complicated and may impact retirement planning if you overestimate how much you think you’ll receive.
Spousal benefits: to be eligible for spousal benefits, you must be at least 62, you haven’t paid into the Social Security system for 30 full-time working years, or your spouse receives a higher benefit. However, the maximum you can receive is half your spouse’s benefit at full retirement age.
Survivor benefits: to be eligible for survivor benefits, you must be at least 60 years old — or 50-59 with a disability — have been married to your spouse for at least nine months before their death. You also cannot have remarried before age 60. Ex-spouses married for at least ten years, children under 18, or disabled children of any age are also eligible for benefits. As a survivor, you can receive 100% of your deceased family member’s full Social Security amount if you delay claiming benefits until 67.
More on Social Security:
- Social Security benefits report confirms major changes are coming
- Medicare changes will impact your wallet in 2025
- How average Americans can better plan for 401(k), retirement income
We spoke with Leslie Thompson, CFA, chief investment officer and co-founder of Spectrum Wealth Management, to discuss Social Security misconceptions and how workers, women, and retirees can allocate their money strategically.
She notes that while there’s a benefit for delaying Social Security until you’re at least 67, it’s essential to understand the full scope of the benefits you’ll receive before then.
“When you look at your finances together as a couple, you might assume that you can collect your social security payment and survivor benefits of a spouse if they pass away,” Thompson said. “But that isn’t the case.”
“You are only entitled to the higher amount — either social security or survivor’s benefits,” she continued. “So that may influence when each spouse decides to retire since men and women have different longevity and risk factors.”
Retirees receiving Social Security may need to rethink their spending and asset allocation
Thompson notes that the most important thing that retirees should monitor is their cash flow and asset allocation. She highlights that income is reduced during retirement, so spending should also be cut.
“The biggest determination for a successful retirement is understanding how much you have coming in each month and your total spending. Understand that you must map out your budget in advance to stay within your means.”
For those approaching retirement, she explains that the best way to plan for your expenses is to create a budget based on your anticipated retirement income and use that amount as your budget cap. Spending as if you’re already retired can be an eye-opening experience when determining how to cut your budget.
“The best way to be aware of your financial situation is to create a budget based upon spending and track it,” she continued. “I always think it’s a great idea for people to spend as if they were retired for a few years before they actually retire.”
“It helps them figure out what works and how to adjust their behaviors before they’re actually in that position. Even shopping around for cheaper medications can make a huge difference.”
She notes that most retirees may need to revisit their portfolio asset allocations due to inflation and changing interest rates.
“Retirees will likely need to take on risk and increase exposure to maintain balances and counteract inflation,” she said. “Those approaching retirement and current retirees need to consider how they need to adjust their asset allocations and maintain purchasing power.”
“Women, in particular, need to look out for the impacts of inflation on their portfolio. They typically have longer life expectancies and may need a cash reserve to last longer than their male counterparts.”
Caitlin Cahalan is a Personal Finance Writer at TheStreet, covering retirement planning, homeownership, personal finance, and consumer sentiment.
Spectrum Wealth Management, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Additional information about Spectrum’s investment advisory services is found in Form ADV Part 2, which is available upon request. The information presented is for educational and illustrative purposes only and does not constitute tax, legal, or investment advice. Tax and legal counsel should be engaged before taking any action. The opinions expressed and material provided are for general information and should not be considered a solicitation for purchasing or selling any security.