Liz Weston: Widow seeks ways to fill a survivor benefit gap

Dear Liz: I am a 57-year-old widow. My children are 23, 22, 20 and 17. When my youngest graduates next June, I will lose the last of our Social Security survivor benefits. Our benefits used to be over $5,000 per month but her check is currently $2,084 per month. I am barely making it monthly now with my mortgage and other bills but will definitely not be able to afford to stay in my home once that benefit ends.

I don’t know if I would be better off to rent out my home or sell it and buy a condo so my kids have a place to land.

I am engaged and plan to live with my fiancé (knowing we can’t get married until I’m 60!). What are some things to consider in making this decision?

Answer: For those who aren’t aware, millions of children receive Social Security benefits because they are retired, disabled or their disabled parents. The benefits typically continue until the child turns 18, or 19 if the child is still at high school. People caring for the offspring of a deceased worker also can receive benefits, but those typically end when the child 16.

Otherwise, survivor benefits generally are available to qualifying widows and widowers starting at age 60. Remarrying before age 60 can disqualify the survivor from benefits.

You obviously need a plan to bridge that two- or three-year gap before your widow’s benefits begin. But the best approach depends on the details of your situation.

You don’t mention how many of your children are now living at home, although it’s not unreasonable to consider how to house one or more of them in the next few years. Your youngest may want to live at home while going to college, or need a room to come back to in the summers if she goes away to school.

The others may well boomerang home even if they’re currently on their own. Kids can take longer to launch these days, especially in high-cost areas where affording even a modest apartment can be difficult.

That doesn’t mean you have to buy them their own place, of course. What you’re able to offer will depend on your resources and circumstances. You may need the money from the sale or rental of your home to bolster your retirement funds, for example, or to help pay college tuition.

Whether renting or selling is the best move also depends on your circumstances. Selling may be the better option if you can’t rent the home for more than its carrying costs. Even if you could make a profit each month, you may not want the hassles of being a landlord. A bad tenant or an unexpected vacancy could upend your finances, particularly if you don’t have considerable savings.

Also, if you rent out the home for more than a few years, you would lose the ability to exempt up to $250,000 in home sale profits when you did finally sell it. To take advantage of the exemption, you must have owned and lived in the home for at least two of the previous five years.

Consider scheduling a session with an approved financial counselor. These advisors are fiduciaries, which means they’re required to put your best interests first, and they often work on a sliding scale. You can get referrals from the Assn. for Financial Counseling & Planning Education.

Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.

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