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Post: Outside the Box: Losing a spouse’s Social Security benefit can push the elderly into poverty

There probably is no greater financial blow in old age than the death of a spouse. That is why, since 1939, Social Security has provided survivor benefits to cushion the loss of income when a spouse passes away. But those benefits are no longer adequate for many 21st century widows and widowers to stay financially afloat. This is due, in large part, to stagnant wages, difficulty saving for retirement, and the disappearance of employer-provided pensions. In 1939, many working and middle-class households did not have two incomes. But today, both spouses typically must earn income to sustain their standard of living. When one spouse dies, household income can plummet.   

This problem is especially vexing for women, who typically experience a nearly 40% drop in household income after a spouse passes away (compared to a 22% drop for men). Because women typically live longer than men, widows may have to stretch out their retirement assets over a longer period of time. And by the time women reach age 85, three out of four are widows. Social Security often is their sole source of income.  

“Elderly widows face high poverty rates, and many confront steep reductions in their household Social Security benefits after the death of a spouse,” says Rep. John Larson (D-CT), Chairman of the House Ways and Means Social Security Subcommittee, who has authored a bill to boost benefits.  

Read: This is why Congress needs to act on Social Security — right now

The current benefit formula does not replace both incomes when a spouse dies. If a retirees’ own benefit is less than or equal to her deceased spouse’s benefits, the most she can collect every month from Social Security after he passes away is the equivalent of his benefit amount. If the spouse’s Social Security benefit exceeded her husband’s, she would get none of his benefit amount after he dies. The same applies to widowers.   

Read: Why your Social Security check might be lower

Let’s say that the deceased husband had been receiving a $1,600 monthly benefit, while his wife collected a Social Security check for $800 per month. After the death of her spouse, the widow would then receive her own $800 benefit plus $800 of her husband’s, for a total of $1,600 — the equivalent of the deceased spouse’s benefit amount. That represents a 33% drop in monthly household income — from $2,400 to $1,600. If, for instance, the surviving spouse had also been earning a $1,600 monthly benefit, she would not collect any of her deceased spouse’s benefit — reducing household income from $3,200 to $1,600 per month — a 50% drop.   

Read: The Social Security Administration has changed its statements — why you should check it out

As we can see, the monthly Social Security benefit for the widow’s household can drop precipitously — but household expenses usually do not. That puts widows in a financial squeeze. There may be some reduction in spending when a spouse passes away, but fixed expenses like rent or mortgage, car payments, and insurance may remain. That leaves many widows struggling to pay their monthly bills.   

Deirdre Miller, 74, of Penacook, N.H., is one of many widows who finds herself in a financial squeeze. Her household Social Security benefit was cut in half when her husband, David, passed away in 2015. Since then, she has undergone bankruptcy and may soon lose her home. Today, the retired administrative assistant must put all of her prescription drugs on a credit card because she doesn’t have enough cash on hand to pay for them. 

Read: Retirees in the U.S. do not live on ‘fixed incomes’

“I’m going under. My daughter has helped me financially. But eventually I am going to be forced to sell my home. Where will I go and what will I do?” she wonders. Miller was glad to receive this year’s 5.9% Social Security COLA (about $100 per month for her), but says that the $22 Medicare Part B premium hike is eating into it.   

The rationale for denying widows and widowers a more robust Social Security benefit is the “dual entitlement rule,” which holds that a person eligible for more than one of a similar kind of benefit shouldn’t get both. To receive both benefits would, as the thinking goes, be redundant or excessive. It is the same rationale behind the controversial Government Pension Offset (GPO), which reduces or eliminates Social Security survivors benefits for certain government retirees who were not covered by Social Security when they were employed.  

Read: Should I claim Social Security at 70, or take it early and invest the money?

Widows and widowers are never likely to receive their own benefits plus all of their deceased spouses’, but the formula can be improved.

Rep. John Larson’s Social Security 2100: A Sacred Trust legislation aims to make these benefits more adequate. The bill would ensure that widows and widowers maintain at least 75% of the combined benefits that they received when both spouses were alive. For example, the widow who earned $800 in benefits compared to her deceased husband’s $1,600 would receive at least $1,800 per month in widows’ benefits under Larson’s bill. The spouse who earned the same $1,600 benefit as her deceased husband would get at least $2,400 after his death – a boost of $800 per month. These increases are not insignificant for widows and widowers struggling to get by. In addition, Larson’s bill would repeal the Government Pension Offset, which would help widows and widowers impacted by the current law.

“My bill will help ensure more adequate benefits for widows and widowers from dual-earning couples after they suffer the loss of their spouse,” says Larson. The Social Security 2100 Act not only helps widows and widowers; it would increase benefits for everyone on Social Security and improve the cost-of-living adjustment (COLA) formula. The House Social Security Subcommittee will mark-up the legislation as early as March, in hopes of a floor vote in May.   

Dierdre Miller says she supports Larson’s bill. As far as she is concerned, it can’t become law soon enough. She just spent $2,000 for dental work, $800 for a new pair of glasses, and now her hearing is failing. Medicare doesn’t cover these things, so she must dig into her Social Security benefits to pay for them.

“Widows are just surviving. We should be thriving,” says Miller. “We should be a part of society that is honored. But we are just put aside.”   

Max Richtman is president and chief executive of the nonprofit National Committee to Preserve Social Security and Medicare.

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