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The Social Security Death Benefit and How It Affects Widows & Widowers

How the Social Security Clawback and Lump Sum Death Benefit affect surviving children and surviving spouses after a loved one’s passing

Most of us spend our working years planning for retirement. We save, we get retirement plans, and we know that Social Security will be there to fall back on.

But when a loved one passes away, many of us are shocked to learn that you could have to pay back part of the deceased’s Social Security funds.

What?!

Yes, you read that correctly: Social Security makes you return money when a loved one dies. You’ll also be surprised to learn how low the Social Security death benefit is!  

The Social Security Clawback

The Social Security Administration requests family members contact them as soon as possible when a loved one passes away. Many people believe this is to provide surviving family members with the benefits they are entitled to — but there is also something else to be aware of: The Social Security Clawback.

If someone receives their monthly Social Security payment and later passes away in that month, Social Security forces their family to pay back a portion of their hard-earned retirement funds as well as any future funds they may have received.

Any funds earned for the month in which they passed away, as well as any monies received for later months, must be returned. For example, if a person passes away in February, their family must return the benefit paid in March. This is known as the Social Security Clawback After Death.

Paybacks can be done by contacting your financial institution if the beneficiary had been receiving direct deposit. If a check was mailed, do not deposit the check and instead send it back to Social Security.

If surviving family members are entitled to benefits, you should first square away and return any of the deceased’s benefits before claiming your own.

The Lump Sum Death Payment

To make matters worse, Social Security only provides a measly one-time payment of $255 in what they consider a “Social Security Death Benefit for Spouse” to assist your family with the cost of funeral services, burial or cremation, outstanding debts, etc. If eligible surviving family members apply for the Social Security Lump Sum Death Benefit (LSDB) within two years of the passing away of the loved one, they may qualify to receive this small financial assistance.

Depending on who else is a surviving family member and their relationship to the deceased will determine who receives the LSDB payment (in order):

  1. The surviving spouse who was living with the deceased
  2. Another family member who was entitled to or eligible for benefits, such as a widow(er) or the parents of the decreased
  3. A child of the deceased who was entitled to or eligible for benefits

Documentation is required to collect the LSDB. In order to collect this measly death benefit, surviving family members must provide the following

  1. Proof of death
  2. Proof of relationship to the deceased
  3. The deceased’s social security number

While the Social Security death benefit for widow(er)s is small, it can help contribute to the many expenses spouses and family member incur.

Other Survivors’ Benefits

Some family members may also qualify for other monthly benefits through the Social Security Administration. The amount received may be based on the deceased’s benefits before passing away.

Primarily, Social Security death benefits are for children and spouses.

Family members who may be eligible for what some call “Survivors’ Benefits” include:

  • The surviving spouse aged 60 or older (or 50 or older if disabled)
  • The surviving spouse of any age, if the widow(er) is responsible for the deceased’s child who is 15 or younger or who is disabled
  • The unmarried child of the deceased if the child is age 17 or younger (18 or younger if a full-time student in high school)
  • If the child is 18 or older and has a disability which was diagnosed before age 22

Less commonly, other people may qualify for Survivor’s’ Benefits including:

  • The stepchild, grandchild, or adopted child of the deceased
  • Parents of the deceased who depended on the deceased for at least 50% of their support and are age 62 or older
  • The surviving divorced spouse of the deceased

It is best to contact the Social Security Administration as soon as possible to find which benefits family members may be entitled to.

Preparing Your Family & Finances

As you can see, it’s important to not rely on Social Security for a loved one’s final expenses. Funeral costs are higher than ever, with the average service costing nearly $10,000! That doesn’t take into consideration travel and accommodations for visiting family members who may come from afar to attend the service.

Many seniors avoid burdening their loved ones with exorbitant funeral costs by purchasing a type of life insurance known as Life Insurance with Living Benefits (also known as Final Expense Life Insurance). Life Insurance with living benefits is meant to be just that: to cover funeral costs and any outstanding debts that may be left behind.

Unfortunately, many people leave outstanding debts when they pass away which fall to surviving family members. Also, the death of a loved one could be the loss of additional household income, further exacerbating an already upsetting and difficult situation. Final Expense insurance provides family members with much-needed financial assistance during these tough times, giving them one less worry.

Although Social Security may not provide much assistance when a loved one leaves us, it’s important to find out which benefits surviving family members may be entitled to and to plan ahead. Difficult times are rarely remedied by money, but having finances in order can lift a heavy burden off of families during difficult times.

For more information, read the Social Security Administration’s “How Social Security Can Help You When a Family Member Dies.”

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