Does life insurance affect social security survivor benefits

Social Security provides Americans with unique, all-in-one protection from birth to death. While they’re working, Americans pay into Social Security, and then Social Security’s earned benefits provide income for workers and their families when they need them. Social Security provides life insurance, disability insurance, and retirement income, all in one program.

Benefits are paid out of Social Security’s two trust funds. To ensure full payment of all benefits, Congress has periodically re-balanced the distribution of incoming contributions between the two funds, since all workers contribute to both funds. This has been done eleven times over the course of Social Security’s history, as part of Congress’s responsible stewardship of the program. However, the last time Congress adjusted financing between the two funds, it left the disability fund less adequately financed than the retirement fund. The disability fund is now projected to deplete its reserves by the end of 2016 if Congress doesn't act, resulting in a 19 percent benefit cut affecting 11 million Americans. 

Social Security’s Life Insurance (Survivor Benefits)

More than 6 million Americans currently receive Social Security survivor benefits, earned through a deceased spouse or parent’s prior work.

• Social Security survivor benefits are the equivalent of a $476,000 life insurance policy for a worker with young children.
• About 96% of persons aged 20-49 who were working and contributing to Social Security in 2013 have acquired survivorship protection for their children under age 18.

Social Security Disability Insurance (SSDI)

Many Americans have a disability, but only those with the most severe, career-ending conditions qualify for SSDI benefits. To be eligible for SSDI benefits, disabled Americans must have worked and paid into Social Security; and they must have medical evidence showing that their physical or mental impairment is so severe that it prevents them from doing any work available in the national economy. Consequently, only about 1 in 5 of the 54 million Americans with some type of disability qualify for SSDI payments.

• Nearly 11 million Americans currently receive Social Security benefits because of a worker’s disability – 9 million severely disabled workers, and 2 million of their children or spouses.
• The average American receiving Social Security because of a disability worked for 22 years to earn Social Security benefits before becoming too disabled to continue working.
• The average Social Security payment to a disabled worker is about $1,100 a month. Even with Social Security, SSDI recipients are twice as likely to be poor as other Americans.
• The likelihood of a career-ending disability rises steeply with age: 70% of SSDI recipients are over age 50, and 30% are older than 60.
• Disabled workers who live to Social Security retirement age are automatically switched from receiving SSDI insurance to receiving retirement payments.

Social Security’s Retirement Income

Almost 42 million Americans receive Social Security benefits related to retirement – over 38 million due to their own work and almost 3 million through a retired spouse or parent.

• For 6 out of 10 seniors, Social Security provides the majority of their income.
• A typical retirement Social Security benefit is about $1,300 a month.
• As seniors grow older, their other sources of retirement income tend to decline, making Social Security more important the older you get.  

Additional Resources:

• What is the Chained Consumer Price Index (CPI)?
• Impact of Chained CPI on Social Security
• Impact of Chained CPI Cost of Living Adjustments on Seniors

More on Social Security

Pages

• Donate
• Member Login
• Press Room
• Contact

• About
  • History & Mission
  • Board of Directors
  • Staff
  • Senior Fellows
  • Membership
  • Our Experts
  • Robert M. Ball Award
  • Myers Library
  • Impact & Partners
  • Careers
• Research
  • COVID-19
  • Social Security
  • Medicare & Health Policy
  • Unemployment
  • Caregiving
  • Workers’ Compensation
  • Disability Supports
  • Other
    • Inequality
    • Long-Term Services & Supports
    • Poverty & Income Assistance
    • Workforce Issues & Employee Benefits
• Learn
  • Social Security
  • Medicare
  • Workers’ Compensation & Disability
  • Unemployment Insurance
  • Long-Term Services & Supports
• Latest Thinking
  • Discussions
  • Member Spotlight
• Who We Serve
  • Members
  • Policymakers & Advocates
  • Researchers
  • Communities
  • Students
• Events
  • Upcoming Events
  • Event Calendar
  • Past Events

Social Security for Widowed Spouses in Retirement

The National Academy of Social Insurance provides this information to help those seeking to better understand Social Security, which continues to be a cornerstone of retirement security for American workers and their families. We encourage you to use the information on our site to increase your familiarity with social insurance programs as they currently exist and to envision how they could evolve to meet the needs of a changing world.

Who is entitled to survivors’ benefits from Social Security?

How Social Security Can Help You When a Family Member Dies SSA.gov/benefits/survivors

Social Security is a key source of financial security to widowed spouses. About 7.8 million individuals aged 60 and older receive Social Security benefits based, at least in part, on a deceased spouse’s work record. These surviving spouse beneficiaries are overwhelmingly women.

These beneficiaries include 3.6 million people who are eligible only as widowed spouses. Another 4.2 million who are entitled to benefits based on their own work records but whose deceased spouses’ benefit amounts were higher than their own, will receive higher benefits as individuals (although, as discussed below, lower household total benefits).

How much do widowed spouses receive?

Social Security survivors’ benefits are especially important to women (95% of survivor beneficiaries are women), because wives tend to earn less than their husbands, and they also typically outlive their husbands. When a retired worker dies, the surviving spouse receives a benefit equal to the deceased worker’s full retirement benefit.

Depending on the widow’s or widower’s circumstances, however, this benefit may substantially reduce her (his) monthly household income because only one Social Security benefit is now arriving (whichever is higher), not the two benefits that the couple received before the spouse’s death. Women who had worked and earned their own Social Security benefits, in particular, may find themselves struggling to meet the rising fixed expenses that come with aging.

Example (husband worked, wife did not): John Smith has a $1,200-a-month retirement benefit, and his wife Jane gets $600 as a 50 percent spousal benefit, so total family income from Social Security is $1,800 a month. When John dies, Jane will get $1,200 a month as her survivor benefit, so her total income is two-thirds of the benefit the Smiths had received as a couple.

Example (husband earned more than wife): Joe Sanchez receives $1,200 a month, and his wife Consuela receives $800 a month, so total family income is $2,000 a month. When Joe dies, Consuela will receive her retirement check plus $400 a month as a widow. Her total benefit will be as much as Joe had been receiving, $1,200 a month, or 60 percent of their former income as a couple.

Example (husband and wife both worked, earned equal amounts): Thom and Cai Nguyen each get benefits based on their individual earnings. Each of them is entitled to $1,200 a month, and total family income is $2,400 a month. When one of them dies, the widowed spouse continues to receive $1,200 a month, but she is not entitled to both benefits. Total monthly family income is thus reduced to $1,200, half of their former income as a couple.

For more information on Social Security and survivor benefits, please visit the Social Security Administration at ssa.gov/benefits/survivors/.

Additional resources:

• This seminal Academy resource is updated annually to reflect the latest Trustees’ Report: Social Security Benefits, Finances, and Policy Options: A Primer
• This brief explores four options to reduce widespread poverty among elderly widows, which is driven by a Social Security formula that especially hurts women who had been higher earners: Widows, Poverty, and Social Security Options, Social Security Brief No. 9
• This paper offers a strategy to address the lack of social insurance support for caregiving, which disproportionately penalizes women, especially women of color: Crediting Care in Social Security: A Proposal for an Income Tested Care Credit

How can we help you?

Stay up-to-date on the latest research & policy updates.

Subscribe to our newsletter

What affects the amount of Social Security benefits?

What happens when you are the beneficiary of a life insurance policy?

What happens when the owner of a life insurance policy dies?

What income counts towards Social Security earnings limit?