Social Security Survivor Benefits

Most people think of Social Security as a Federal scheme that provides basic pensions for workers. It does more than that, though. One extra benefit provided is the assistance it gives to surviving spouses and other dependents of deceased workers who have paid into the scheme through their wages. Dependent children or parents of the deceased can claim survivor benefit in some circumstances, but the calculation of benefit for surviving spouses is the most involved.

There are two kinds of survivor benefit available to surviving spouses of deceased Social Security participants, the first being simply a single payment of $255. The second kind of benefit, the ongoing income benefit, is less straightforward.

The income benefit is only payable from the date it’s claimed, so any unclaimed benefit will be altogether lost. There is no back-dating provision. However, that doesn’t necessarily mean that the survivor should claim as soon as possible.

The Amount You Receive Goes Up Between Ages 62 & 67

As for retirement pension, the amount of benefit you get each month varies according to the age you are when you first claim the benefit, and that differential continues for as long as you live. In the case of the retirement pension, the earliest age at which you can claim is 62, and the percentage of the full amount you receive goes up until you reach full retirement age, which is 65 to 67, depending on your date of birth.

For survivor benefit, the earliest age at which you can claim is two years earlier, at the age of 60. At that age, the survivor will receive the amount that the deceased spouse would have been entitled to in pension payments, less a deduction of 28.5%. That is a sizable deduction over a remaining lifetime which is likely to be another 25 years or so. The deduction reduces over the years in the same way as the deduction from full pension payments, until full pension age is reached.

If the deceased spouse was actually receiving a Social Security pension at the date he or she died, then the maximum available to the surviving spouse is the amount which the deceased spouse was getting. So, if the deceased person claimed his or her pension early, at the age of 62, then the surviving spouse’s entitlement will never reach the amount they could have had if the deceased had delayed claiming until the full pension age or later.

The Survivors Claim Can Come At A Younger Age

If an early claim for pension is made, the pensioner then dies and the surviving spouse also claims at the earliest age, 60, then the benefit will be subject to two separate deductions, one for the original claim at age 62, then for the survivor’s claim at age 60.

It should be noted that a divorced spouse can also receive survivor benefit, provided the marriage was longer than 10 years, unless they remarry before the age of 60, and remain married.

Surviving spouses who are disabled can claim from the age of 50 rather than 60, and a surviving spouse with young children can claim at any age.

Wall Street Investing Versus Using a Registered Investment Advisor

So you think you’re ready to invest. Maybe you scored a decent inheritance, maybe you finally sold that vacation home you never liked, or maybe you just made some smart business decisions. Whatever the case, it’s high time you put that money to use.

To a beginner, the investing world is downright paralyzing. The number of options is staggering. Once upon a time, investment was primarily done in the hallowed halls of Wall Street, where insanely rich (and occasionally crooked) investment firms handled your money for you. That all changed with the internet. The economy climbs and falls but information is becoming more available by the day. Your money is yours and yours alone, and choosing who to trust it to can build you a lovely nest egg or cost you dearly in the long run.

Registered Investment Advisors, or RIAs, have been growing in popularity in the past decade, coinciding nicely with a drop in faith in Wall Street’s integrity and abilities. This new breed of broker is bound by law and duty to put the client’s interests ahead of their own. They make a fixed percentage of their client’s cash and do not receive commissions. So while a Wall Street broker might prompt a huge, unwise investment from a client so that they can pocket their fee and run, an RIA suffers from no such conflict of interest.

Are RIAs trustworthy?

Well, they have to wade through a battery of tests, certifications, and registrations to even work in their chosen profession, including registration with the Securities and Exchange Commission. Are RIAs effective? It sure seems like it. Some estimates point the finger at them for a staggering 4.75 trillion dollar decline in funds handled by major Wall Street firms. It seems like the old guard has some competition.

And it looks like they’re taking notice. Firms like Vanguard and T. Rowe Price Group have shifted to a fee-based model and dropped commissions altogether, resulting in steadier profits and happier client relations. Investing is always a rough game, but at least now the incentive to separate a client from his cash is not so strong.

So what does Wall Street do well?

Well, as of now, it is still the biggest fish in the pond. Its market share is larger and its client base is more experienced. And it looks like it will continue to borrow tips and tricks from its RIA competitors. If nothing else, it seems like the commission-based model of investment is dying a slow death, so no matter where you take your cash, you’ll have the option to pay small amounts over a larger period of time, rather than dumping large fees for big promises.

And maybe the personal touch is important. RIAs are growing in popularity and small companies are taking bigger bites of the pie. Who wouldn’t relish the chance to be a part of a startup success story? Wall Street doesn’t need more cash in its mattress, that’s for sure. It’s a very big mattress. Very, very big.

How Is Wall Street Changing?

Long considered one of the major financial powerhouses of the United States, as well as home to some of the richest tycoons ever to snack on caviar, Wall Street’s reputation looks to be on the decline. The financial crisis it helped create certainly hasn’t helped matters. Public opinion towards the institution is at its lowest point in 40 years. Films like “The Wolf of Wall Street” and “Wall Street” depict brokers as greedy, infantile, and nearly subhuman. Occupy Wall Street seems to have made its point. We Americans simply aren’t big on banks right now.

And now it seems like we’ve finally spoken enough truth to power. Wall Street firms are losing business to an upstart new brand of broker known as a Registered Investment Advisor, or RIA. The rise in RIAs has caused a significant siphoning of Wall Street cash flow. Nearly 4.75 trillion dollars has been pulled away from Wall Street’s four largest firms, with Morgan Stanley Smith Barney, Wells Fargo, UBS Financial Services, and Bank of America Merrill Lynch all reporting underwhelming profits, all thanks to a new brand of investor with a healthier, more impartial business model.

RIA’s Change With The Times

RIAs don’t operate on the usual commission-based model, meaning they’re under no impetus to sell you anything special. RIAs are legally bound to put client interests first and are by all accounts effective at it. They take a one or two percent fee that stays steady, win or lose, and Wall Street firms are tripping over themselves to adopt this bold new strategy.

Of course, the financial crash of 2008 cost them some serious goodwill in the public eye, and reforms have been few and far between. The most important reform attempt came with the Dodd-Frank bill, signed into law by President Barack Obama in 2010. In essence, the bill called for more oversight and transparency on Wall Street, which had been allowed to essentially self-govern up until that time. In practice, it’s been a mixed bag. As is usual in our hyper-partisan new world, many from one side of the aisle claimed the bill does far too little, whereas those on the other side claim it’s too much.

In theory, the bill makes sense. Many Wall Street firms have been deemed “too big to fail”, such that their closing would have catastrophic effects on the U.S. economy. The Dodd-Frank bill created several committees intended to monitor these companies and even break up ones that are deemed too massive and dangerous. Caps have also been placed on fees for mortgage brokers who might benefit from overselling property to misinformed consumers. While all this seems reasonable in theory, the actual execution of these powers has sometimes been suspect. In addition, smaller banks and startups have struggled to stay afloat in this new world of heightened caution. It’s a volatile time on Wall Street that will likely continue for years to come.

Be Wary Of Wall Street, Choose Your Investment Team Wisely

Basically, if you’re thinking of investing, keep a wary eye on Wall Street. These banks have cost us all a lot with unhealthy business practices and the attempts to reform them are a mixed bag. RIAs are a growing alternative. Consider pouring your money elsewhere, at least until Wall Street can do some serious housecleaning.