What happens to your social security number after you die

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If you're handling the financial affairs for an older person who has died, you may wonder how the government knows to stop sending Social Security payments.

Or maybe there's a surviving spouse or dependent who is hoping those benefits can continue.

Although Social Security rules can be complicated, the bottom line is that a person's benefits end at death. And for survivors, whether you qualify depends on several factors.

Here's what to know.

Where to start

It's important for the Social Security Administration to be alerted as soon as possible after the person dies.

In most cases, funeral homes notify the government. There's a form available that those businesses use to report the death.

"The person serving as executor [of the estate] or the surviving spouse can also call Social Security," said certified financial planner Peggy Sherman, a lead advisor at Briaud Financial Advisors in College Station, Texas.

Whoever does the reporting should be armed with the decedent's Social Security number.

When payments stop

Be aware that a person is due no Social Security benefits for the month of their death.

"Any benefit that's paid after the month of the person's death needs to be refunded," Sherman said.

With Social Security, each payment received represents the previous month's benefits. So if a person dies in August, the check for that month — which would be paid in September — would need to be returned if received.

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If the payment is made by direct deposit, the bank holding the account should be notified so it can return benefits that shouldn't have been delivered.

It may be no surprise that using someone else's benefits after they die is a federal crime, regardless of whether the death was reported or not.

If the SSA receives notice that fraud might be happening, the allegation is reviewed and potentially will warrant a criminal investigation. To combat duplicity, the agency matches records with other government entities to identify unreported deaths.

Benefits for survivors

If a spouse or qualifying dependent already was receiving money based on the deceased's record, the benefit will auto-convert to survivors benefits when the government gets notice of the death, Sherman said.

"For all other cases, the surviving spouse will need to call Social Security and schedule an appointment to apply for survivors benefits," Sherman said. "You cannot do this online."

If the widow or widower has reached their own full retirement age, they can get their deceased spouse's full benefit, Sherman said. They can apply for reduced benefits as early as age 60 (or, generally, age 50 if disabled), in contrast to the standard earliest claiming age of 62.

Meanwhile, if the survivor qualifies for Social Security on their own record, they can switch to their own benefit anytime between ages 62 and 70 if that payment would be more.

An ex-spouse of the decedent also might be able to claim benefits, as long as they meet some specific qualifications.

For minor children of a person who died, benefits also may be available, as well as to a surviving spouse who is caring for the kids.

Finally, upon the death of a Social Security recipient, a surviving spouse (or child) is generally given a lump sum payment of $255.

Since 1935, the Social Security Administration has been issuing numbers to permanent residents of the United States. Nine simple digits distinguish each American from his or her fellow residents. Today, assigned randomly and never recycled, a social security number is as unique an identifier as your fingerprints. (Although, in the past, duplicates are known to have been issued accidentally.)

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Early on, SSNs were issued through the states, and the first three digits designated the state where the person obtained the number; some states had more than one number, and this continued through 1972. Beginning in 1973, the numbers and cards were issued centrally, from the Social Security Administration (SSA) in Baltimore, MD, with the first three digits being assigned based on the zip code included on the application. Most people can verify that their number coincides with the place where they obtained their number here.

There is a general east to west pattern, although not perfect, in the assignment of the first three digits, with several exceptions. For example, New Hampshire is 001-003, Maine is 004-007 and Hawaii is 575-576. Places that fall even further out of the pattern include D.C. (575-576), Puerto Rico and the U.S. Virgin Islands (580-584, 596, 599), and Mississippi and Florida (both received 587-589 and 595 after they exhausted their initial assignments).

The remaining digits of the social security number have little significance, other than as a unique identifier. The second two digits were initially designed to be the holder's date of birth, but this was quickly abandoned in place of using those as a group number to ensure the accuracy of the issuing process. The last four digits are simply a serial number.

This all changed in June of 2011. In order to help protect the integrity of SSNs and to address the problem of insufficient new numbers in some states, the SSA stopped issuing numbers based on location in lieu of a system of "randomization" that included the following changes:

• Eliminated the significance of the highest group number (a way of verifying a SSN)
• Introduced previously unassigned area numbers
• Ended any geographical significance of the first three digits

To date, 450+ million SSNs have been issued, but with just under 1 billion possible number combinations, there has never been a need to recycle numbers, and the SSA notes that it does "not reassign a Social Security number (SSN) after the number holder's death." Of course, at some point the numbers will run out and some change will need made to keep up that policy, perhaps adding a digit. But, for now, the answer to "What happens to your SSN when you die?" is absolutely nothing. It remains yours.

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Bonus Facts:

• According to the Pew Research Center, in a 2013 survey of Republicans, Democrats and Independents, only 12% of Independents and 17% of Republicans favored decreasing spending on Social Security, while 35% of Republicans and 37% of Independents favored increasing spending. The Democrats were split 3% (cut spending) to 49% (increase spending).
• The Social Security trust funds were created in 1983 by a prescient Congress that anticipated the drain retiring Baby Boomers would have on the system. Taking in far more than it spent for 30 years, by September 2013, they held more than $2.8 trillion in assets.
• Social security provided $786 billion in retirement, survivor or disability benefits to 57 million people in 2012. Benefits are paid according to earning history and age of retirement and are not dependent on the amount you paid in (although the benefit received is correlated to earnings).
• The long-anticipated Baby Boomer mass retirements are finally realized, and since 2010, the system has been taking in less than it has expended. The trust funds and reserves are expected to last through 2031 (or 2033, depending on whom you ask).
• Absent social security, more than 40% of people aged 65 and older would live in poverty. Today, nearly 90 percent of this demographic benefit from Social Security, and it is the majority source of cash income for 65% of retirees.

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Melissa writes for the wildly popular interesting fact website TodayIFoundOut.com. To subscribe to Today I Found Out's "Daily Knowledge" newsletter, click here or like them on Facebook here. You can also check 'em out on YouTube here.

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