I have a question regarding social security.

The husband of one of my wife's co-workers recently died. He was under 60, so he wasn't old enough to start collecting ss yet.Their kids are grown, so they aren't entitled to any of his benefits. She recently applied for his benefits and was told that she only qualifies for $255 one-time survivor benefit. She was told that since she's still working and makes over $15,000/yr, that's all she's entitled to. When she turns 60 she can collect on her own benefits, but not his. He paid into ss for over 20 years. My question is this:

What happens to all the money he paid into the system?

I'm asking because Nadine is in the same situation. Our son is grown. If I die before I start collecting ss, she won't be able to collect on the survivor's benefits. I'm not faced with the same situation because, as a teacher, she doesn't pay into ss. She pays into Teacher's Retirement, which has a different set of rules. What happens to all of the money I've paid into the system all these years?

 

From what I understand, she would get reduced benefits.. http://www.ssa.gov/survivorplan/survivorchartred.htm

 

The link above is helpful.

If she is widowed and her benefit is less than what the spouse's would have been, I THINK she would collect her benefit and part of the spouse's, but I don't think the benefit will exceed what the spouse would have received. Obviously the age she files for benefits will play a role in how much she receives.

From what I hear the employees at the SS office are quite helpful when you have questions.

 

Also, as I understand it, the social security system is a "pay-as-you-go" system.

"Social Security is largely a pay-as-you-go program. This means that today's workers pay Social Security taxes into the program and money flows back out as monthly income to beneficiaries. As a pay-as-you-go system, Social Security differs from company pensions, which are “pre-funded.”

That is, the money that workers pay today are already being used to pay the benefits of those who are collecting today. There is not an account for the money for each worker.

So, basically the money that he (or you) have been contributing has already been used to pay the current benefits of people already collecting social security.

As you probably already know, your wife, since she is not paying into social security, will be under different rules, one of them probably being the Government Pension Offset Rule. It is possible that she could collect some Social Security benefits as your survivor, but those benefits would be reduced because of her teacher's pension.

Here is some info about the Government Pension Offset, which probably applies to your wife.

Government Pension Offset

 

Unless I'm reading it wrong, I didn't see any where in there that she would collect any benefits before she turns 60. He died at age 59, and had not started collecting any benefits yet. She's 52 and not eligible for her own benefits yet. So she gets nothing between now and age 60?

The people at IRS told her she only gets a one-time $255 payment.

 

She needs to go to the nearest SS office and talk with someone there. Depending on when the person was born, SS might not start until 65 and I don't think your friend had qualified for SS. SS is not an insurance policy or annuity, it's a system that tries to guarantee that when you can no longer work, you won't starve.

 

I believe that is correct that she cannot collect a survivor benefit until age 60 at the earliest. As a survivor, she cannot collect any benefits until she turns age 60, unless she has dependent children she is raising, or she is disabled herself.

Here is more useful info about survivor benefits.

Survivor Benefits

This also says that survivor benefits cannot be collected until age 60 except under special circumstances (dependent children, disablity).

(I knew someone in a similar situation whose husband died when he was 50 and she was 51. She had not worked because she had an illness which made it physically difficult for her to hold a job. However, her disability was not on the social security's official list of disabilities, so she was not entitled to survivor benefits until she was age 60. She ended up moving from Mississippi to Michigan when she found a job in a Christian Ministry program.)

Did she talk to someone at the IRS office or the social security office?

 

It's my understanding she can start collecting off her husbands benefits when she turns 60 unless she remarries.
Levi

 

She's already met with Social Security and they told her that when she turns 60, she can collect on his or hers, whichever is higher, but not both. So if she chooses to collect on hers, what happens to all of the money he paid into the system? Or, if she collects on his, because it's higher, what happens to all of the money that she paid into the system?

 

The money that they have been paying into social security has already been used to pay the benefits of the people who have been collecting social security.

The money collected from social security taxes now is being used to pay the beneficiaries now.

Since 1975 until the present, there have been about 3.3 workers per beneficiary.

There are currently 2.8 workers for each Social Security beneficiary. By 2033, there will be 2.1 workers for each beneficiary.

(I got these numbers from data on the Social Security website.)