Last month, a friend lost her husband in an accident on his way to work. Now she has to raise their little boys, ages three and six, by herself. I’m not sure what her financial situation is like now, but I’ve spent the last month making sure that my husband and I have adequately provided for our family in the event of the unthinkable.
I figured out that we have adequate life insurance. You can read my posts at Chief Family Officer on figuring out how much life insurance you need and whether you might need a whole life policy. I also shared 10 tips for reducing your life insurance costs.
For the first time, I researched Social Security death benefits and learned some interesting things:
- Much of what you need to know is on your annual statement. Each year before your birthday (after you turn 25), the Social Security Administration sends out a statement summarizing your earnings and projecting your benefits. The SSA web site has a sample statement. You can see that it shows whether you qualify for death benefits and the amount your survivors would receive if you died this year (see page 2).
- The amount of your survivors’ benefits is determined by your lifetime earnings. Again, this is reflected on your annual statement. The more you’ve earned, the greater the benefits.
- A surviving spouse receives full death benefits only upon reaching age 65 or age 67, depending upon when he or she was born. Lesser benefits may be available at an earlier age.
- A exception to the above rule is that a younger surviving spouse can receive death benefits if he or she is caring for a child aged 16 or younger who is entitled to a child’s benefit. The number of years you must work before you are eligible for death benefits depends upon your age, but even if you have not qualified, benefits can be paid to your children and your spouse who is caring for them if you worked for one and one-half years in the three years before your death.
- Unmarried children 18 and under are eligible for their own survivors’ benefits. If they’re still in high school, they can receive benefits up to the age of 19. There are also provisions for disabled children and other descendants to receive benefits.
- Your surviving spouse and minor children may be eligible for a one-time death benefit of $255. I’ve always seen this listed on my annual statement and never quite known what to make of it. It’s such a small amount, I wonder why they even bother.
- If your surviving spouse works, his or her benefits may be reduced. But the good news is, your spouse’s work won’t affect the benefits your children receive.
For more information, visit the Widows, Widowers, and Other Survivors section of the SSA web site.