Social Security Changes Could Help Widows: CRR

There are several reasons for this poverty level: the loss of retirement income on the death of a spouse — not just Social Security, but any private pension benefit, which could be cut in half or even eliminated if no joint-and-survivor annuity was chosen at retirement. In addition, the decedent could have been experiencing ill health for as much as a decade before death, which would imply that household medical expenses have been higher for years, depleting retirement assets the surviving spouse needs to live on.

And because of the way the widow's benefit is structured, it has actually fallen in value since inception, and at widowhood, the benefit can be cut by up to 50%. But household expenses won't go down by 50% at widowhood, leaving the surviving spouse trying to get along on an inadequate benefit. The Organization for Economic Cooperation and Development puts the needed benefit amount at 67%, while the Census Bureau sets it even higher — at 79% — to maintain the same standard of living.

The report says that in order to give widows more parity, some policymakers favor raising the widow's benefit to 75% of the couple's combined monthly benefit. To compensate, it's been suggested that the spousal benefit be reduced while both spouses are alive so that more funds are available at widowhood. That would also provide greater parity between one-earner and two-earner households. In addition, for higher-income couples, the increase in the widow benefit could be financed by reducing the benefits when both members of the couple are alive.

— Related on ThinkAdvisor:

• Few Are Financially Prepared for Widowhood: Study
• Bill Would Increase Social Security for Widows, Divorcees
• Widows Got Bad Social Security Claiming Advice From SSA: IG Report