Social Security and Death Benefits

When a person dies, their surviving spouse (and in some cases, ex-spouse) and minor or disabled children are entitled to Social Security death and survivor benefits. It is important to understand these potential SS benefits, whether or not you will qualify for survivor benefits, and how to access them.

The SSA Death Master File

The Social Security Administration (SSA) maintains a Death Master File which holds death records for over 83 million people. It is used to 1) assist financial institutions, insurance companies, and state and local governments in detecting fraud; and 2) pay survivor benefits due to the spouse and/or children of a deceased individual. If an individual is erroneously classified as deceased in SSA’s Death Master File, they must prove to the SSA they are still alive. It can be a nightmare to restore their SS record. Once an individual is classified as “deceased,” they no longer have an active Social Security number. This means they cannot get a job, open a bank account, obtain a loan, or have any sort of financial life in America.

SSA’s Death Master File has been in the news recently. First - the DOGE “discovery” that there are 120-year-olds in the SS system who could not possibly still be alive. Of course, they are not alive - but their records had not been updated correctly as “deceased” due to coding quirks, and none of these deceased individuals were receiving benefits. Later - the Trump administration reported certain immigrants as deceased in an attempt to get them to self-deport - hoping to encourage immigrants to voluntarily leave the country, regardless of whether or not they are in the US legally. The idea was the Social Security system would be strengthened if immigrants who pay into SS never collect benefits.

How Are Deaths Reported to the SSA?

It is usually not necessary for a surviving spouse or child to report a death as deaths are reported to SSA by the funeral home. However, if this is not done, a surviving spouse must call SSA and provide the name, Social Security number, date of birth, and date of death of the decedent. Once a death is reported, SSA immediately stops benefits being paid to the decedent. The decedent’s financial institution places a hold on any benefits that are direct deposited after the date of death and returns the funds to SSA.

To be entitled to a benefit for any given month, a decedent must be alive the entire month. But since benefits are paid in arrears, a decedent’s estate might to be entitled to a check that arrives after death. For example, the check deposited in June would actually be for May, and the estate would be entitled to that payment. Since the bank will likely put a hold on it, the estate should reclaim the benefit by filing Form SSA-1724. This form also takes care of any Medicare premiums withheld after the decedent’s date of death.

Types of SSA Survivor Death Benefits

1. Lump sum death benefit of $255 - SSA pays a $255 one-time lump sum death benefit to the surviving spouse of the decedent. This amount has not changed in more than seven decades despite annual inflation. If there is no surviving spouse the $255 death benefit is paid to a minor or disabled adult children. If no living spouse or minor or disabled children, it could be paid to a former spouse who is eligible for survivor benefits. This happens if the former spouse and decedent were married over ten years, or the former spouse is caring for the decedent’s child. A lump sum death benefit must be claimed by a phone call to SSA. Online claims are not allowed.

2. Ongoing survivor benefits - Survivor benefits may be paid to a surviving spouse, any eligible ex-spouses, and any minor or disabled adult children.

· Death Before Full Retirement Age (FRA) - If the decedent died before reaching full retirement age (FRA) and had not claimed their own retirement (or disability) benefit, SSA establishes a “death PIA” approximately equal to the amount he would have received if he had continued to work and claim his retirement benefit at his FRA. This death PIA increases by annual Cost of Living Adjustments (COLAs) until the surviving spouse is ready to claim it. If the spouse remains unmarried, he/ she may claim it as early as age 60; however, claiming early reduces the benefit to 71.5% of the full amount.

· Death After FRA - If the decedent dies after FRA but before claiming his benefit, the “original” survivor benefit will equal the amount he would have received if he had claimed as of the month of death, including any delayed credits earned up to the month of death. The “actual” survivor benefit will depend on when the widow/ widower claims it and may range from 71.5% to 100% of the amount depending on when it is claimed (between the ages of 60 and FRA). If the decedent was receiving benefits at the time of death, the original survivor benefit will generally equal 100% of his benefit amount.

It is important to coordinate the widow/ widower’s own retirement benefit with the survivor benefit. It is possible to sequence benefits to maximum advantage – first claiming one benefit then switching to the other. A widow who remarries after age 60 may claim survivor benefits based on her former husband’s earnings record. If there is more than one deceased former husband, she may choose the highest benefit. Surviving divorced spouses may also claim survivor benefits if they were married to the decedent over ten years and are currently unmarried (or remarried after age 60). The same switching strategies are available to surviving divorced spouses.

Take time to learn about survivor benefits and how to access benefits so you know what to do when you spouse passes away. If you are not currently working with FPS, we would be happy to talk with you. Questions? We are here to help.

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Best regards,

Janet Rhodes Friedman, CFP®, CDFA®, MBA Janet@PlanWithFPS.com

617-630-4978

Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions, LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.