Widowhood: Economic Issues

The 1939 amendments to the Social Security Act provided benefits to wives and widows of retired and deceased workers. These benefits were initially paid to wives and widows age sixty-five or older. In 1950, widowers were made eligible for benefits, provided financial dependency on their wives prior to death could be established. In 1956, spouse and widow benefits were made available to women sixty-two to sixty-four years of age, and in 1961 to widowers in this age group. The age of eligibility for survivor benefits was reduced to sixty for widows in 1965 and for widowers in 1972, the same year that the dependency requirement for widowers was eliminated, making all Social Security survivor benefit provisions gender-neutral. Survivor benefits are payable to divorced spouses if the marriage lasted at least ten years. If each meets all eligibility rules, both a surviving spouse and divorced surviving spouse may receive benefits based on the deceased spouse’s earnings record.

Survivor benefits are equal to 100 percent of the deceased worker’s primary insurance amount, but may be reduced if the deceased worker had received retired-worker benefits prior to age of full benefit eligibility; if the survivor receives benefits early; if the survivor is eligible for other social security benefits (the dual entitlement provision described below); if a pension from noncovered work is received; or if the survivor reports other earnings (but only prior to the age of full benefit eligibility when the earnings limit is lifted). Some of these are described here, but program details are available at the Social Security Web site (www.ssa.gov).

Survivor benefits are payable at age sixty or, for disabled survivors, at age fifty-five. However, receipt before the age of full benefit eligibility reduces the amount received. As that age rises from age sixty-five to age sixty-seven (for those turning age sixty-two in 2022 or later) the monthly reduction will be adjusted such that 71.5 percent of the full survivor benefit is always payable at age sixty. A maximum and minimum payable amount applies to some survivor beneficiaries. For survivors who first receive survivor benefits no earlier than the age of full benefit eligibility (currently sixty-five, but increasing to sixty-seven) the survivor benefit can be no more than what was, or would have been, paid to the deceased worker. This means that a survivor of a retired worker who received benefits that were reduced for early retirement can receive no more than that amount, even if the survivor was older than age sixty-five (or, in the future, age sixty-seven) when survivor benefits were first received. Concern that the cap on benefits for widows of workers who received benefits early contributes to the lower income of widows and may lead to a lifting of the cap. The Social Security Handbook provides greater detail on specific program provisions.

Survivor benefits for which an individual is otherwise eligible may be reduced by the dual Table 1 SOURCE: Author entitlement provision that, in effect, leads to the payment of the higher benefit for which an individual is eligible. The consequence is that survivors of one- and two-earner couples with identical retired-worker benefits may be paid quite different amounts, with the latter experiencing a larger decline in Social Security income than the former. Table 1, which shows the monthly benefits paid to two hypothetical couples, illustrates this (the higher hypothetical amount approximates the primary insurance amount of males awarded retired-worker benefits in 2000). Couple A is a single earner couple, while spouses in Couple B have identical covered work histories and benefits. The retired-worker benefit of the single earner couple ($1,200) is equal to the combined retired-worker benefits of the two-earner couple. Each spouse is also eligible for a spouse benefit equal to one-half of the other spouse’s retired-worker benefit. The nonworking spouse in Couple A will be paid an $800 spouse benefit, but, because only the higher of any two benefits is paid, neither spouse in couple B will receive an incremental benefit (the $300 spouse benefit would be less than each spouse’s $600 retired-worker’s benefit). Thus, when one spouse in each couple dies, the survivors are paid very different amounts. The survivor benefit is larger for couple A and equal to two-thirds of the pre-widowhood amount, compared to only one-half, for survivor B.

Differences in benefits paid to couples with identical earnings histories have motivated proposals for changes in Social Security survivor benefits. Most reform proposals call for the payment of a given percentage of a couple’s combined benefits. This would increase the survivor benefits of Couple B, and for all couples that share earnings responsibility. Some proposals include the reduction or elimination of spouse benefits, a change that would equalize predeath benefits paid to couples such as A and B, but leave the survivor benefit differences intact. However, savings from their elimination would help finance the higher cost of uniform survivor benefits for all couples.