When a spouse dies, there can be a lot of financial considerations, especially if the spouse that passes was the primary breadwinner or the one who handled the retirement planning. Yet for the spouse left behind, there are some options available through Social Security that can allow you to claim your spouse’s benefit and remain financial comfortable in your retirement. Working with your tax professional or accountant, such as JOE GORMLEY CPA in PRINCETON, NJ, you can determine how your Social Security benefits may be affected by your spouse’s passing away.
Eligible widows or widowers may be able to apply for survivor benefits from their spouse’s Social Security benefits. In order to be eligible, you will need to have been married for at least nine months to your spouse before their death. If you were divorced from your spouse, you need to have been married at least 10 years and have not remarried before the age of 60. If you are in your 50s and disabled or you were married for 10 years prior to your divorce and are disabled, you may also qualify for this benefit.
Keep in mind that the qualifications for being fully insured under this provision are less strict than that of normal retirement benefits. Spouses who may not have been aware that their partner would qualify for Social Security may later find that they are eligible for a widow or widower’s benefit. Therefore, you will want to be sure to do your homework after your spouse passes away, so that you know what you may be eligible for and what you do not qualify for. If you have a child that is a dependent when your spouse dies, you may also be able to claim a Social Security benefit for caring for the dependent.
Another point is that benefits can be claimed as early as age 60, which is two years before the minimum age to otherwise apply for retirement benefits. This means that you could claim the widow’s benefit and leave your own alone until your full retirement age before you switch them. To determine what your full retirement age is, you will need to consult with the Social Security office based on your birthday. Those born later are typically set at a higher retirement age that those of earlier generations.
However, you might find that you could be subject to income tax on your Social Security earnings if you have addition income. Make sure that you can pass the earnings test if you are planning on drawing your benefit before your retirement age. Once you reach your retirement age, the earnings test will no longer apply. Therefore, it is important to understand the implications of retiring early versus waiting longer to retire and claiming your Social Security benefits later as a result.
If you are applying for these benefits, it is important to know what benefits are available to you and what ones you wish to claim and those that you do not wish to claim. Working with a retirement planner prior to either spouse passing away, you can create a retirement plan for you both, as well as one where one of you has passed away. This way, you can have an idea of the financial implications of your investments and income streams as they relate to your Social Security benefits.
This can be a complicated task, so it is important to consider consulting with a tax professional and financial advisor who can also assist with retirement planning. They can help you to understand what the widow’s benefit really means and if it an effective financial option for you in the case of your spouse’s early death.
While a majority of married couples will enter into retirement before one or the other passes away, the reality is that a small minority will not be able to have their spouse enter into retirement. Therefore, it is important to have plans in place to assist the surviving spouse to make sound financial choices with the benefits that are available to them from the federal government.
As you can see, there are plenty of reasons why you may want to consider applying for the widow or widower’s benefit before your traditional retirement.
Click on the link below to connect with a tax professional or accountant in the offices of JOE GORMLEY CPA in PRINCETON, NJ, who can assist you in determining if you qualify for a widow’s benefit and the tax implications.
Joseph J. Gormley CPA