How Social Security treats the survivors of young workers

Eligibility rules are more lenient for the survivors of young workers because of their brief careers.

I just received a sad question from a financial adviser in Indiana who asked if there would be any Social Security benefits available for a young widow and child following the death of their 25-year old husband and father in a traffic accident. She noted that the young man had not worked long enough to accrue the 40 credits usually required to be eligible for Social Security benefits.

I assured her there is an exception to the 40-credit rule when a very young worker dies or becomes disabled. The adviser’s question really hit home, as I was on the way to a funeral of my 31-year-old nephew who had died over the July 4th weekend.

Although most of us think of Social Security as a government program for older people who retire or become disabled or that pays survivor benefits to elderly widows and widowers, it also provides valuable benefits for very young workers. Because of their brief careers, the eligibility rules are more lenient.

A worker must be insured under the Social Security program before retirement, survivor or disability benefits can be paid to them or their family. Workers earn a quarter of coverage — also called a credit — for a certain amount of work covered under Social Security. Workers can earn a maximum of four credits per year.

In 2017, a worker earns one quarter of coverage for every $1,300 earned under the Social Security system, regardless of when the money is earned during the year. So, someone who earns at least $5,200 this year would receive the maximum four credits of coverage.

The number of credits needed to provide benefits for survivors depends on the age of the worker at the time of their death. The younger a person is, the fewer credits they must have for family members to receive survivors’ benefits. Survivors are entitled to benefits if the worker, after age 21, worked at least one and one-half years during the three years prior to death. So, assuming the young man accrued at least six credits of coverage before his untimely death, there would be some benefit available for his surviving spouse and child.

Although widow’s benefits usually begin as early as age 60 (or 50 in the case of a disabled widow), a widow of any age who is caring for a child under age 16 is entitled to benefits worth 75% of the deceased worker’s benefit amount. The child is also entitled to a survivor benefit equal to 75% of the deceased parent’s benefit until the child turns 18 (or 19 if still in high school). Together, the mother and child could receive 150% of their loved one’s Social Security benefit.

In larger families, survivor benefits may be limited by the maximum family amount. The limit varies, but it is generally equal to about 150% to 180% of the basic benefit rate. If the sum of the benefits payable to family members is greater than this limit, the benefits will be reduced proportionately.

The adviser also asked what would happen to the young widow’s survivor benefits if she worked. Just like anyone else who receives any type of Social Security benefit before full retirement age, the young widow would be subject to earnings restrictions. In 2017, she would forfeit $1 in benefits for every $2 earned over $16,920. However, her earnings would not reduce the child’s survivor benefits.

A surviving spouse or child also may receive a special lump-sum death payment of $255 if they meet certain requirements. Generally, the lump-sum is paid to the surviving spouse who was living in the same household with the worker when they died. If there’s no eligible surviving spouse, the lump-sum can be paid to the worker’s child (or children). If the eligible surviving spouse or child is not currently receiving benefits, they must apply for this payment within two years of the date of death.

There is also an abbreviated qualification period for workers who are disabled before they turn 31. It is known as a “special insured status.” A worker under age 31 would need to have accrued Social Security-covered credits in at least half of the calendar quarters since turning 21 to qualify for disability benefits for themselves and their family. Minor dependent children under age 18 and a spouse of any age who is caring for the disabled worker’s child under age 16 are each entitled to benefits worth 50% of the worker’s disability benefit amount, subject to family maximum limits and earnings restrictions.

To determine the benefits your family could receive if you became disabled or died today, sign up for your personalized estimated benefits statement.

(Questions about Social Security? Find the answers in my new ebook.)

Mary Beth Franklin is a certified financial planner.