New Social Security Bill Boosts Survivors Benefit

Rep. Linda Sanchez, D-Calif., a ranking member of the Ways and Means Social Security Subcommittee, has reintroduced the Protecting Our Widows and Widowers in Retirement (POWR) Act to boost a surviving spouse's Social Security benefit.

"Losing a spouse is devastating. And for those who depend on Social Security, the added financial distress of losing significant income can make an already difficult time even more troubling," Sanchez said in a statement. "The POWR Act will create an alternative benefit, ensuring widows and widowers can keep paying their bills."

The bill would "help alleviate the financial burden on these couples by providing the surviving spouse a benefit equal to 75% of the combined Social Security benefit received by the couple" before their spouse's death, according to the National Committee to Preserve Social Security and Medicare, which endorses the bill. "This would help millions of American widows who face severe financial loss resulting from the death of their spouse."

Under current law, a surviving spouse can receive either a survivors benefit — up to 100% of their spouse's Social Security primary insurance amount — or their own Social Security benefit, but not both at the same time.

"Among Social Security's most important protections are the monthly survivor annuities, currently paid to over four million widows and widowers," Nancy Altman, president of Social Security Works, told ThinkAdvisor Wednesday in an email. "But these benefits are very modest and often represent a drastic drop in family income. Women and men who have just lost their spouses should not also face a substantial loss of income that puts them at risk of poverty."

The POWR Act, Altman added, "takes the important step of increasing survivors' benefits so that widows and widowers can live with dignity."

The National Academy of Social Insurance (NASI), according to Sanchez, has found that women suffer a greater financial hit following the loss of a loved one.

Women tend to earn less than their husbands and typically outlive them, NASI has found. According to the Social Security Administration, more than 23 times as many widows as widowers over 60 are receiving benefits.

Despite women participating more in the workforce in recent years, they continue to rely more heavily on Social Security than men, Sanchez said. "The average widow sees a 33% to 50% reduction in Social Security benefits after the death of her spouse."

However, "on average, an elderly person needs 79% of the income received while both were alive to maintain their standard of living," Sanchez explained.

The Alliance for Retired Americans and Elder Justice Coalition also back the bill, which Sanchez first introduced in 2016.

Caregiver's Credit Boost

Another bill introduced in late May, the Social Security Caregiver Credit Act of 2023, would boost the caregiver's credit.

The credit in the bill, introduced by Rep. Brad Schneider, D-Ill., "is very modest extra boost of credit for up to 5 years of earnings," Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League, told ThinkAdvisor in an email.

"The Social Security benefit formula uses the highest 35 years of earnings to calculate one's benefit," Johnson said. "It would help fill in an earnings record of a caregiver who did not have 35 years of earnings or their earnings were very low."

Also, "to deter anyone from gaming the system, It has stringent qualification rules spelling out who the patient can be, and how long the caregiver must work every month (at least 80 hours per month) to qualify," Johnson explained.

The bill "also requires explicit documentation, some of which may be difficult if not impossible to produce. I question how those of us who provided caregiving 20 years ago for someone who has passed away would be able to provide the required certification from doctors, in order to qualify for the credit," Johnson added.

The earnings credited to one's record would be determined on one half the Average Wage Index, Johnson said.

"In figuring benefits, the first thing that SSA does is to convert one's earnings to current dollars. They use 100% of the Average Wage Index of each year of your earnings," Johnson added. "Thus this 50% of the AWI amount is extremely modest."

Credit: Shutterstock