Editor’s note: This story originally appeared on The Penny Hoarder.
Most of us never see the first 6.2% of our paycheck. This money goes directly to Social Security, with the primary goal of giving you a monthly retirement benefit one day.
But what if she died suddenly tomorrow? What happens to all the money I paid into the system?
First, let’s tackle a common misconception: Social Security doesn’t put money aside in an account for you. Your payroll taxes are funded by the Social Security Fund. Once you qualify, you get benefits from the trust. But the Social Security Administration doesn’t have an amount of money with your name on it.
When you die, your Social Security payments will stop. If you die before the benefits start, you will not get the money you paid.
But sometimes, someone else can get Social Security benefits based on your history. This is the case for spousal benefits, ex-spouse benefits, and inheritance benefits. Someone else may be able to get Social Security benefits based on your benefits — but they don’t take your Social Security.
If you have a spouse, ex-spouse, or dependents, they may be able to use your record to qualify for survivor benefits upon your death. Here who gets what.
If you have never been married and have no dependents
No one will receive a survivor’s benefit based on your record if you have never married and have no children or other dependents.
The money you paid is simply part of the Social Security Fund. It will be used to pay for other Social Security obligations.
If you are married
Your spouse will be eligible for inheritance benefits when they turn 60 (or 50 if they are disabled) if they have been married for at least nine months and have not remarried.
However, they will only receive a survivor’s benefit if it is higher than their Social Security benefit. In other words, Social Security will give them the two biggest benefits, but not both.
Their interest depends on:
- Whether you started benefits at the time of your death: If you die before benefits start, your spouse’s benefits will depend on your base insurance amount. This is the benefit you are entitled to at full retirement age. But if you die after Social Security begins, your spouse’s eligibility depends on your benefits. For example, if you claimed Social Security at age 62, but your full retirement age was 67, your monthly paycheck would be a third lower. Your spouse’s benefits will depend on this lower amount.
- How long does your husband wait: If your spouse claims inheritance benefits before full retirement age, they will receive between 71.5% and 99% of your benefits — your basic security deposit if you haven’t started yet, or your actual benefit if you have one.
If you leave behind a spouse who takes care of your child who is 16 years old or younger or who is disabled, they will receive 75% of your allowance, regardless of their age.
If you are divorced
Generally, former spouses are eligible for the same inheritance benefits as current spouses, provided you have been married for at least 10 years and have been divorced for two years.
If you remarry and your ex-spouse claims inheritance benefits based on your record, this will not affect your current spouse’s entitlement.
If you have minor children
Any children age 18 or younger (or under 19 if still in high school) are eligible for 75% of your benefits, provided they are not married. This is on top of the 75% your current or former spouse may receive to take care of your child.
However, Social Security has a maximum family benefit of 150% to 180% of the basic security deposit.
So if you died tomorrow and died at the hands of your spouse and four children under 16, they would still only receive 150% to 180% of your benefit.
If you have adult children
Your children over the age of 18 (or 19 if they are still in high school) will not be eligible for Survivors’ Benefits. The exception: If they are at least 22 years old, unmarried and have a disability that began before they turned 18, they can get 75% of your benefits.
If your parents are your dependents
If one parent is dependent on you, which means you provide at least half of their support, they can qualify for a survivor’s benefit. They will only be eligible if you are 62 or older when you die. They can receive up to 75% of your benefit amount – but only if the inheritors’ benefit is greater than their own.
Are survivor benefits sufficient?
Survivor benefits can certainly help your loved ones after your death, but they are not enough to protect your family, especially if you have young children. A survey by Value Penguin found that survivors’ benefits would leave a widowed spouse caring for two children with an average monthly deficit of $2,695.
If you have loved ones who depend on you, life insurance is a must. One common guideline is to purchase life insurance that is enough to cover 10 times your annual income. However, this may not be enough if you have children who want to pay for their college education, or if you and your spouse have significant debts.
It is also necessary to have a will and keep it up to date. If you have a 401(k) plan or an Individual Retirement Account (IRA), be sure to check your listed beneficiaries at least once a year. The listed individual(s) will receive the funds, regardless of your will instructions.
The money you paid into Social Security may help your loved one if you die tomorrow. But be realistic. If you have dependents, survivor benefits alone probably won’t be enough.
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