Despite the current uncertainty about the future of Social Security, it remains, along with pensions and investments, an essential component of retirement income for men and women, married, single or divorced. Understanding Social Security rules, in order to work through complex choices about how and when to take benefits, can seem daunting. Many of these decisions have a lifetime impact, and cannot be undone. These can be even more critical given the financial uncertainty resulting from divorce.
If you divorce, or are divorced from your spouse after at least 10 years of marriage, you are entitled to receive an income from Social Security based on your divorced spouse’s earnings, even if they’ve remarried. This is the case as long as the benefit is less than you would receive based upon your own earnings. While the exact amount you receive depends on your age and when you begin to draw benefits, if you begin taking benefits at your full retirement age, your divorced spouse benefit is equal to one-half of your ex-spouse’s full retirement amount. In order to qualify for a divorced spousal benefit you must be at least 62 years of age, unmarried, and divorced for at least two years. If your ex-spouse is already receiving benefits the two-year rule does not apply. If you remarry, you will no longer be able to collect benefits based on your formers spouse’s record, unless your new marriage ends in annulment, death, or another divorce. Here’s an example. Jim Scott was born in 1950 and Mary Scott in 1951. They were married for 12 years and divorced. According to the Quick Calculator on the Social Security Administration’s website and based on his working record, Jim would receive a monthly benefit of $2,450 beginning at his full retirement age (FRA) of 66. Mary is eligible to receive 50 percent, or $1,225 per month, beginning at her FRA, also 66. Suppose Mary wants to claim her benefits early at age 62, since longevity is not a friend to her family. In this case, Mary’s monthly benefit will be reduced permanently by about 30 percent, decreasing her monthly income to $858. No matter how long Mary lives, she will continue to receive the reduced monthly amount.
What if your ex-spouse has not applied?
Suppose your ex-spouse has not applied for Social Security, but is old enough to be eligible. Provided you are otherwise qualified you can still receive benefits on your former spouse’s record. However, if your ex-spouse delays benefits beyond full retirement age, (so they can receive additional benefits) your benefit amount will not increase for any delayed retirement credits that they may receive.
Claim now … Claim more later
If you are eligible for Social Security based on your own record, and have reached full retirement age (FRA,) you can choose to receive the divorced spouse’s benefit while delaying your own. By waiting, your own benefits will increase by 8 percent per year up to age 70. At that point you can switch to your own Social Security benefit, assuming it will be more than your divorced spouse’s benefit. This is known as the “Claim Now, Claim More Later” strategy.
What if your ex-spouse is deceased?
If your ex-spouse is deceased (and you were married for at least 10 years and are currently unmarried), you may collect benefits as early as age 60 as a surviving divorced spouse. You can collect benefits as early as age 50 if your former spouse is deceased and you are disabled. Even if you decide to remarry after age 60, you are still entitled to your ex-spouse’s survivor benefit. Remember, if you remarry before age 60 and your former spouse is deceased, you are not eligible to receive benefits unless your second marriage ends in death, divorce or annulment. The only exception to the 10-year length-of-marriage rule for a deceased spouse is if you are caring for a disabled child, or child under the age of 16, who is also a child of theirs, and that child is receiving Social Security benefits based on their record. If you remarried and your current husband or wife dies, and each marriage lasted over 10 years you should apply for spousal benefits on the work record providing the larger benefit since you cannot collect both. Before you decide to claim your Social Security benefits, contact the Social Security Administration (800-772-1213 or www.ssa.gov) to determine how much you are entitled to collect on your own work record or that of your ex-spouse in order to decide the best solution to meet your financial needs, and work with a knowledgeable financial advisor.
Steven Weber, Gloria Harris, and Frank Weber are the investment and client services team for The Bedminster Group, providing investment management, estate, and financial planning services. The information contained herein was obtained from sources considered reliable. Their accuracy cannot be guaranteed. The opinions expressed are solely those of the authors and do not necessarily reflect those from any other source.