Social Security and estate planning
It is important to consider how Social Security benefits fit into your overall estate plan.
UNDERSTANDING Social Security Benefits
There are three main types of Social Security retirement benefits based on an individual’s work record : retirement benefits for the worker, spousal benefits, and survivor benefits.
To be eligible for Social Security retirement benefits, a worker must have a work history of earnings meeting a certain minimal level per year over the course of at least ten years. A worker is eligible to draw retirement benefits as early as reaching age 62 or may delay drawing benefits to as late as age 70.
Social Security spousal benefits are benefits that may be available to current spouses, widows, and ex-spouses. When you qualify for Social Security retirement benefits, your children may also qualify to receive benefits on your record. Your eligible child can be your biological child, adopted child, or stepchild. A dependent grandchild may also qualify.
Social Security survivor benefits may be available for spouses, children, or a parent of a worker who dies.
What Factors Determine the Amount of Your Social Security Benefits?
When planning your estate plan it is important to know how your Social Security benefits are calculated. The amount of Social Security retirement benefits paid is based on several factors:
The age when the worker begins drawing Social Security retirement benefits;
The number of years the worker paid into Social Security; and
The total amount the worker has paid into Social Security
There are many factors to consider when deciding the best time to start drawing Social Security. The Social Security Administration provides a calculator to help determine when to start drawing benefits. Using that calculator can help your investigation, but the safest route is consulting both your financial advisor and an estate planning lawyer.