Ask an Advisor: My husband passed away, and I am 63. I still work full-time and earn more than $21,300. For Social Security, do your earnings count minus your pretax health plan and your 401(k), or does it go by your actual earnings?

Ask an Advisor: My husband passed away, and I am 63. I still work full-time and earn more than $21,300. For Social Security, do your earnings count minus your pretax health plan and your 401(k), or does it go by your actual earnings? – Maria

Per the Social Security Administration (SSA), as a widow, you potentially qualify for survivor social security benefits assuming your late husband met the workers credits requirements prior to his death.  (Source: SSA) Here is how the benefit works.

How Your Spouse Earns Survivor Benefits

A worker has the opportunity to earn up to 4 credits per year while working.  According to the SSA website, for 2023, a worker can earn 1 credit for each $1,640 of wages or self-employment income.  Once they’ve earned $6,560 they have satisfied the requirements for their 4 credits for the year. 

The number of credits required to be eligible for survivor benefits will vary based off the age of the deceased spouse and for how many years they were working. 

What to Expect as a Widow

As a surviving spouse of someone who had received enough social security credits, you may have the opportunity to receive reduced benefits as early as age 60.  The social security administration will base the survivor benefit amount on the earnings of the deceased person.  In the grand scheme of things, the more they paid into the social security system, the larger their benefit could be. 

Below are a couple of examples of benefits that survivors may receive:

• Surviving spouse reaches Full Retirement Age (FRA) or older.  Has the potential for 100% of the deceased worker’s benefit amount.
• Surviving spouse younger than FRA and elects “survivor benefits” early.  They’ll receive a reduction in the worker’s benefit of roughly 71.5% to 99%. 

Things to be Mindful of

It is important to be aware that if you are younger than full retirement age, you continue to work to earn income, and you decide to elect survivor benefits that the social security administration may reduce your benefits if your annual earnings exceed certain limits.  For workers born in 1960 or later, their full retirement age is age 67. 

As an example, if you’re younger than FRA during all of 2023, the social security administration must deduct $1 from your benefits for each $2 you earn above $21,240. 

What is Counted as Earnings

If you are working for an employer then only your wages count toward social security’s earning limits.  If you work for wages, income counts when it’s earned, not when it’s paid.  If you have income that you earned in 1 year, but the payment was made in the following year, it shouldn’t be counted as earnings for the year you receive it. 

For those who are self-employed, the social security administration will count only your net earnings from self-employment.  Income is counted once it is received – not when it is earned.  This does not hold true if earnings are paid in a year after you become entitled to social security and earned before you became entitled.

For Those Who May Qualify

For surviving spouses who earn less than the earn-out limits, there may be an opportunity to elect your deceased spouse’s reduced social security benefit as a survivor benefit from as early as age 60 to the widow’s full retirement age.  Then at full retirement age, the surviving spouse can either change the social security benefit over to their own if it is larger than the reduced survivor benefit or continue to receive the reduced survivor benefit and defer their own social security benefit until age 70.  By deferring their benefit to age 70 they’ll be eligible for an 8% increase in benefits each year the social security benefit is deferred past FRA to age 70.

Before making any material changes to your personal finances currently, we recommend and encourage you to speak with your financial advisor and/or the social security administration. 

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Michael R. Acosta, CFP®, ChFC®, CSLP® is a financial advisor based in Charlotte, North Carolina who serves clients nationwide.

Get to know Michael by visiting his profile page on Wealthtender or visiting his website to learn more.

Please note that Wealthtender earns a nominal monthly fee from Michael in exchange for providing access to the benefits described here, subject to these terms. This compensation creates a natural conflict of interest when we favor promotion of Michael and other financial advisors in the Wealthtender community over advisors not featured on our platform. Wealthtender is not a client of these advisors or firms.

This is for educational purposes only.  Please contact the Social Security Administration for complete details regarding your benefits.Michael R. Acosta is a Financial Advisor and Registered Representative of Park Avenue Securities LLC (PAS). OSJ: 6115 Park South Drive, Suite 200, Charlotte, NC 28210. Securities products and advisory services offered through PAS, member FINRA, SIPC.  Financial Representative of The Guardian Life Insurance Company of America®(Guardian), New York, NY. Park Avenue Securities is a wholly owned subsidiary of Guardian. Consolidated Planning, Inc. is not an affiliate or subsidiary of PAS or Guardian. CA insurance license # 0M50974. Guardian and PAS do not offer student loans to finance education nor do they offer legal to tax advice.  2023-156121 EXP. 5/25 

This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

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