Retirement

Divorced Spouses Maximize Social Security Benefits By Navigating Some Tricky Rules

There’s no such thing as “divorce benefits” in Social Security, but divorced spouses often are eligible to receive benefits based on an ex-spouse’s earnings record.

Ex-spouses often quality to receive Social Security spousal benefits, and on fairly liberal terms. Divorced spouses sometimes have better options and more flexibility than current spouses.

But small differences in timing can leave a divorced spouse without benefits, or with lower benefits than would be available with different timing.

Social Security spousal benefits can be collected on the earnings record of a former spouse when the marriage lasted at least 10 years, the couple has been divorced at least two years (in most cases), and the ex-spouse claiming the benefits still is unmarried (in most cases). In addition, both ex-spouses must be at least age 62.

When the qualifications are met, a divorced person may independently claim benefits on the earnings history of the other former spouse.

It doesn’t matter whether the former spouse whose earnings history is the basis of the claim is already receiving retirement benefits. The ex-spouse whose earnings are the basis of the claim isn’t consulted, can be remarried, and isn’t informed that the former spouse is claiming benefits.

The spousal benefits drawn by an ex-spouse don’t affect the amount of the benefits paid to the worker or any current spouse of the worker. That means three or more people can claim benefits based on the same worker’s earnings record.

A divorced spouse can claim the higher of either his or her earned retirement benefits or spousal benefits based on the other ex-spouse’s earnings record.

To keep it simple, let’s say the former wife is considering claiming spousal benefits on the earnings record of the ex-husband.

The spousal benefit for the ex-wife is 50% of the ex-husband’s full retirement age benefit, if the ex-wife doesn’t claim the benefits until at least her full retirement age. The amount of the spousal benefits doesn’t vary with the ex-husband’s age, as long as he is at least 62.

But the ex-wife’s spousal benefit will be reduced if she claims the spousal benefits before her full retirement age. In fact, the rate of reduction for claiming spousal benefits before full retirement age is greater than for claiming one’s own retirement benefits early.

The spousal benefit is reduced by 8.33 percent annually for the first three years benefits are claimed early (that’s 25/36 of 1 percent for each of the first 36 months) and 5 percent for each additional year (that’s 5/12 of 1 percent for each additional month). A divorced spouse who claims the spousal benefit at age 62, will have the benefit reduced by 30 percent whereas a retirement benefit claimed at 62 is reduced by only about 25 percent from the full retirement age benefit.

An ex-spouse doesn’t receive an increase in benefits by waiting to claim spousal benefits after his or her full retirement age. There’s also no advantage to waiting until the other ex-spouse claims retirement benefits, even if that claim won’t occur until age 70. In all cases, the spousal benefits to an ex-spouse are maximized at one-half the other spouse’s full retirement age benefit when the ex-spouse claiming the benefits reaches his or her full retirement age. There’s no increase for claiming after either spouse is older than full retirement age.

When the two-year divorce requirement hasn’t been met, a former spouse still can collect spousal benefits on the earnings history of the other ex-spouse if the other ex-spouse has filed to claim his or her retirement benefits.

To claim benefits on the earnings history of an ex-spouse, you can’t be remarried at the time the claim is filed. It doesn’t matter what age you are, how long you were married, or how long you’ve been divorced. If you remarried, and still are remarried, you can’t claim benefits on the earnings history of an ex-spouse. You can claim benefits only on your own earnings record or that of your current spouse.

This remarriage rule for ex-spouses is different from the rules for survivor’s benefits and so is a source of confusion.

The remarriage rule can discourage some older couples from marrying and in some cases can encourage a married couple to divorce.

An interesting twist is that you only have to be unmarried at the time you file for spousal benefits. Suppose you divorce spouse #1, and then marry spouse #2. You then divorce spouse #2. You’re now eligible to receive spousal benefits based on the earnings history of spouse #1, provided the two of you were married more than 10 years and divorced more than two years, because you’re currently unmarried.

Under the Social Security rules, when you file for any benefit (other than survivor’s benefits) you are deemed to have filed for all benefits for which you are eligible. The Social Security Administration will compute all the benefits and pay you the highest, provided it has complete information about all your ex-spouses.

An ex-spouse also can claim survivor’s benefits as though the couple were still married at the time the other spouse passed away. The surviving ex-spouse also has the right over time to switch from survivor’s benefits to retirement benefits, or vice versa.

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