How Survivors Benefits Are Calculated If You Die Early

Social Security survivor benefits aren't always calculated the same way that retirement benefits are calculated there are provisions in place for an alternate calculation if you die early and that's what we're talking about in today's video so stay tuned hey I'm Devin and this channel is all about breaking down the complex social security rules so you can use them to your advantage as I always remind you be sure to hit that subscribe button and that notifications Vale so you'll see every video I put out because no one else is talking about this stuff and you deserve to know it so we spent considerable time on this channel talking about the way Social Security benefits are calculated now I think understanding these three basic steps is really important if you want to get all you can out of Social Security let's do a real quick review on those three steps the calculation first just historical earnings for inflation second get monthly average from the highest 35 years and in the last step a private monthly average to the benefits formula and that's where you get your PI or full retirement age benefit now this calculation is not only what's your own retirement benefit is based on but all of the other benefits like spousal benefits that are paid from your work record as well but what happens if you die before you've worked 35 years what if you've only worked for 20 years and that's a valid question that I get fairly often from individuals who are being astute about planning their retirement and wonder if survivor benefits are always calculated the same way as retirement benefits with retirement benefit 35 years are used in the calculation whether you've worked 35 years or not so if you've only worked for 20 years there's gonna be an additional 15 years of zeroes included in your benefits calculation needless to say if you know how averages work zeroes in a calculation are gonna drive that down so I don't blame people for wondering if survivor benefits are calculated in the same way if you die early let me just tell you they won't be in the case of death there is an alternate calculation that differs for the normal calculation in two key areas instead of using the highest thirty-five years the administration will take the number of years between the attainment of your age 22 through the year of death and drop the lowest five what's left is divided by the number of months in those years and that's ran through the formula it's effective for that year for example if John dies at 40 the administration would index his earnings for inflation and take the number of years beginning at age 22 and ending at his death now that would be 19 years they would drop all five of the lowest earning years after they were indexed and that would leave him with the highest 14 years of earnings since there are a hundred and sixty eight months in 14 years that would be his averaged index monthly earnings that would then be applied against the benefits formula that was in effect for his year of death but this is where the other key difference in the calculation comes in as long as the deceased person was under age 62 when they died along with a few of the restrictions they'll also do another calculation to see if it produces a higher result and it's called wind Xing and it has nothing to do with cleaning windows at all it's just one of the administration's famous word combinations and it stands for widows indexing now this alternate calculation compares the benefits payable from doing the calculation with the formula that's in place the year you die and then they'll also look at the formula for the year the surviving spouse reaches age 60 or the year you as the deceased person would have reached age 62 now this is important because the benefits formula generally increases every year and a higher benefits formula would produce a higher benefit now I hope this video was helpful to you and will help you and planning your retirement if I could help just contact me in the link in the description and while you're there you'll also find all the supporting documentation for the alternate survivor benefits calculation that we've talked about today hey don't forget to subscribe if you haven't already thank you for watching have a fantastic day you