Social Security Has a Trap Most Couples Don't See Coming - Here's How to Plan for It

Two Social Security checks can make retirement feel a little easier. You get used to seeing both payments come in each month, and before long, that money is built into everything from groceries and utilities to medical bills and housing costs.

But when one spouse dies, one of those checks usually goes away. If you're living on just Social Security, that drop can be especially hard to absorb because many of your regular expenses do not disappear with it. Planning ahead can make that financial adjustment easier to handle during an already difficult time.

How the survivor benefit actually works

When your spouse dies, Social Security generally does not keep paying both full benefits. You generally do not continue receiving both full benefits. Instead, your total Social Security payment is generally based on the higher of the two benefit amounts.

If you have not claimed your own retirement benefit, you can start survivor benefits as early as age 60. Claiming that early gives you about 71.5% of your spouse's benefit, and the amount rises as you wait, reaching up to 100% at survivor full retirement age.

Waiting beyond survivor full retirement age does not earn delayed retirement credits on a survivor benefit, so there is no extra increase for holding off longer.

One claiming decision could affect both of your retirements

If the higher earner has a $2,000 monthly benefit at a full retirement age of 67, claiming at 62 would cut their own check to about $1,400, while waiting until 70 could raise it to about $2,480. The age they claim can also affect how much the surviving spouse may receive later.

Waiting past full retirement age earns delayed retirement credits, which can increase the survivor benefit if the higher earner dies first. Claiming early can leave the survivor with less, although Social Security has special rules that can limit how much of the early reduction carries over.

For some couples, having the lower earner claim first while the higher earner waits longer can provide some income sooner while building a larger benefit for the higher earner and potentially the surviving spouse.

A smaller income can make familiar bills much harder to cover

A smaller Social Security income would be easier to handle if your monthly bills fell along with it, but many of the biggest expenses change very little after a spouse dies.

Your mortgage or rent still needs to be paid, and costs such as property taxes and homeowners insurance can take just as much out of one person's budget as they did before.

After your spouse dies, you may eventually file as a single taxpayer instead of jointly, which gives you smaller tax brackets and a lower standard deduction. Medicare also uses lower income thresholds for single filers when deciding who pays IRMAA surcharges, so some surviving spouses can end up paying more for Part B and Part D even with less household income.

With one Social Security check gone and many bills still close to what they were before, the surviving spouse may have to cover much of the household budget with less money coming in.

Find out whether one Social Security check would be enough

You can get a good idea of how your household would handle the loss of one Social Security check by looking at your projected benefits and monthly expenses.

Start with the higher earner's projected benefit, then compare the amount the surviving spouse could receive with what it takes to run your household each month. If you spend $3,500 a month and the survivor would receive $2,200, you would be looking at a $1,300 monthly gap, or $15,600 a year.

Try building your retirement budget around that one check and see how close the numbers come. A smaller gap may be manageable with some spending changes, while a larger one gives you a reason to save more or reconsider when the higher earner claims Social Security while you still have time to prepare.

A few choices now could protect more income later

Life insurance can be one of the simplest ways to replace some of the income a surviving spouse would lose.

If one Social Security check is worth $1,000 a month, replacing 20 years of that income would require about $240,000 before accounting for investment returns, which can give you a rough idea of how much coverage you may want to consider.

You can also build a separate pool of savings for the surviving spouse. Even if you cannot cover the full gap, setting aside enough to replace a few years of lost income could reduce the amount that has to come out of retirement savings later.

If you have a pension, check the survivor options before you retire. A joint-and-survivor pension can continue paying your spouse after your death, although choosing it usually means accepting a smaller monthly pension while you are both alive.

Since this decision is often permanent once payments begin, it is worth comparing the survivor income with the higher payment you could receive from a single-life pension.

Bottom line

Losing a spouse is hard enough without having to wonder whether one Social Security check will cover the bills. Planning ahead can spare the surviving spouse from facing a sudden income drop at the same time they are dealing with a painful loss.

You cannot keep both checks, but you can make choices now that may leave your spouse with more income later.

Looking at your retirement plan from that person's point of view, including when the higher earner claims and how much income would still be available, can make the years ahead feel a little less uncertain.

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