estate planning

The Social Security Shuffle

By Rick Law, elder law attorney and senior advocate in Aurora, IL Social Security is our government’s income solution for the aging American. The idea behind Social Security was fabulous: providing money on a monthly basis to help our senior community during their golden years. The reality is that with costs on the rise, Social Security goes only so far financially, and standalone Social Security is not enough these days. Living off a dual Social Security income in a married situation isn’t easy without other income, such as a company pension or interest and dividends from savings and/or investments. Things can, and often do, get much worse after the death of one spouse. When you lose your beloved spouse, the government’s rules place you into what I call the “Social Security shuffle.” This isn’t a fancy new dance step, but the beginning of the loss of income. Uncle Sam sends you a letter explaining they will now discontinue one of the two Social Security checks; you do get to keep the larger one.  Here is an example: Beth and Roger are a married couple. Roger gets $1,300 of Social Security income and Beth gets $525. If Roger dies before Beth, what happens? Beth “inherits” Roger’s Social Security check of $1,300. However, she does not retain her own Social Security check of $525. She gets the larger of the two; therefore, the household income drops at Roger’s death by her Social Security amount ($525 per month). But it gets worse. Let’s also assume that Roger had a pension from his industrial job. His defined benefit pension was $1,100 per month. We are frequently surprised at how few people can accurately describe what happens to their pension income when they die! Typically, one of these scenarios applies: • Straight life pension – The pension dies when the participant dies. So in this scenario Beth will get $0.00 per month. • 75 percent, 50 percent, 25 percent, or some other percentage of the pension income – the surviving spouse is named as a percentage beneficiary, but the monthly pension benefit is a percentage of the original pension, even while Roger is alive. So, for Roger, a 50-percent pension for his wife may have resulted in his pension check being reduced from $1,100 to perhaps $980 while he was alive to collect it – and a 50-percent survivor pension benefit for Beth would mean her new pension income would be 50 percent of Roger’s $980, or $490 per month. • Survivor – Here the spouse would get 100 percent of the spouse’s pension amount. With this option Roger’s pension would have been significantly reduced from the straight life pension amount of $1,100. An educated guess might be $780 per month. Again, we can only guesstimate these figures because each defined benefit plan is built differently, and the plan’s actuarial assumptions define these figures. So the numbers above are just to give you an idea of what different pension amounts for Roger might look like. Too many families needlessly lose everything they have.  Don’t let that be you.  If you need help building a fortress around your estate to protect it from creditors, predators, and the cost of chronic disease, give our office a call at or 630-585-5200 or 800-310-3100.  Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect yourself and your family.  Call now, because when you’re out of money, you’re out of options! Sincerely, Rick L. Law, Attorney, Estate Planner for Retirees. Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine,, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.  Call 630-585-5200 or 800-310-3100 for your free consultation now!