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Social security and divorce

By Jim Robenalt

Looking to qualify for divorced-spouse social security benefits? There are a few key principles to keep in mind as you sort through your options.

The divorce rate among couples over the age of 50 — a phenomenon known as the “gray divorce” – has continued to soar nationwide. Surprisingly, this upward trend in the divorce rate is fairly isolated to older couples. In fact, researchers at Bowling Green State University found that, while the divorce rate among younger couples has declined by as much as 43% over the past three decades, the reverse is true for older couples – they have seen their divorce rate more than double since 1990. (Source: BGSU.edu)

Given this trend, many couples contemplating divorce who are at or near retirement age will want to know how a divorce might impact their right to collect social security benefits.

To answer this question, I consulted with a financial expert, Leah Hadley. Leah is the Founder/CEO of Great Lakes Divorce Financial Solutions and Great Lakes Investment Management. Leah has provided guidance and support to a countless number of couples facing the prospect of divorce. Leah is particularly passionate about empowering women to take control of their financial future.

Based on Leah’s guidance and my own further research, here are 10 principles to keep in mind regarding social security and divorce:

 
  1. How do I qualify for social security benefits as a divorced spouse?

The qualification rule is fairly simple: if you were married at least 10 years to your ex-spouse, you can qualify for social security benefits on your ex’s work record. To satisfy this qualification, no court order is necessary. You will likely need to come forward with evidence of a marriage certificate and divorce decree to prove that you were married at least 10 years and that you are now divorced.

As Leah noted, there are instances in which couples finalize their divorce just before crossing the 10-year threshold. In these cases, the timing of the divorce may seem trivial in the moment but there may be long-term unforeseen consequences when you reach retirement age. For this reason, it is important to be aware of your potential rights and consult with professionals as necessary when seeking a divorce.

2. Do I need to negotiate social security benefits with my soon-to-be ex-spouse?

It may be of some relief to you that social security benefits are not a matter to be negotiated. In fact, your ex-spouse does not even need to know that you are collecting benefits on their work record. Qualifying for social security benefits as an ex-spouse is strictly a matter between you and the social security office. Your ex-spouse’s benefits will not be impacted – they will receive the same amount regardless. 

3. How much can I receive as an ex-spouse?

If you apply for social security benefits on your ex-spouse’s work record, then the maximum amount you can receive is 50% of what your ex-spouse is eligible to collect at full retirement age. You can learn more about your ex’s “full retirement age” here, but it is generally somewhere in the range of 66-years of age.

There is a website published by ssa.gov which provides a table with examples of benefits for workers with maximum taxable-earnings. Let’s say, for instance, that your ex-spouse had a long working career and qualifies for $3,240/mo at full retirement age. As the divorced spouse, you would then be eligible to collect half this amount, or $1,620/mo.

If you qualify for your own social security benefits, as well as your ex-spouse’s, then you will be entitled to collect on the higher of the two.

4. How soon can I collect social security benefits as an ex-spouse?  

If you and your ex-spouse are each at least 62 years old, then you can qualify for a divorced spouse social security benefit. However, if you take benefits before full retirement age (age 66 or so), you will receive a reduced benefit. Your benefit will reduce approximately 6 ½ percent each year (or 5/9 of 1 percent each month) that you take benefits before full retirement age. 

There may be good reasons to take benefits “early.” This will depend upon your own financial circumstances. As Leah explained, it is always best to make a financial plan so you have full and complete information before making a decision.

Couple on bench considering divorce prospects

5. Should I wait later than full retirement age to collect benefits as an ex-spouse?

The short answer is “no.” While there may be reasons — depending upon your particular financial circumstances — for taking benefits “early”, the calculus is straight forward as to whether to take benefits “late.” If you are claiming benefits based on your ex-spouse’s work record, then you should not wait later than full retirement age to collect benefits.

While retirees can increase their benefit by as much as 8% per year by delaying taking social security until age 70, this does not apply when a person is collecting benefits on their ex-spouses’ work record. Instead, the maximum amount you can collect is 50% of your ex’s benefit at full retirement age. Do not wait past this point (around 66 years old) to collect your divorced spouse benefit.

6. My ex-spouse is not collecting their benefit yet – can I still collect divorced-spouse benefits?

If your ex-spouses is waiting to receive social security benefits—perhaps because they wish to delay collecting to increase their own benefit – then you may still be permitted to collect your divorced-spouse benefit if you have been divorced at least 2 years, a.k.a., the “2-year rule.”

If your ex is younger than you, then you can collect social security benefits on your own record; and, then when your ex becomes eligible, you can begin collecting the divorced spouse benefit.

7. How might remarriage impact social security benefits?

If your ex-spouse remarries, your divorced spouse benefits will remain unchanged.

However, if you are collecting social security benefits on your ex-spouses’ work record, and you decide to remarry, then your divorced-spouse benefits will likely terminate. Any spousal benefit will then likely transfer to your current spouse’s record. There are limited exceptions to the rule—such as if your new spouse is receiving alternative forms of social security like survivor benefits or childhood disability benefits. But the general rule is that divorced spouse benefits terminate upon remarriage.

8. Will I qualify for survivor benefits if my ex-spouse dies?

Yes, you may qualify for survivor benefits if your ex-spouse dies. With survivor benefits, you may be entitled to the full amount of your ex-spouse’s social security benefit upon their death. To qualify for survivor benefits, you will need to show that:

  1. you were married to your ex-spouse for 10 years;

  2. you are at least 60 years of age (50 if you are disabled), or you are caring for a young child under the age of 16 from the prior marriage; and

  3. that you are single, or if you are married, you did not remarry until you were 60 years of age (50 if you are disabled).

     

9. Is social security taxed?

In many cases, the answer is yes. If you are single, and your income is above a certain threshold – for instance, $34,000/yr if you are single – then up to 85 percent of your social security benefit will be taxed. (Source: ssa.gov)

10. What are concrete steps I can take now to begin the process?  

An important first step, Leah explains, is checking with the social security office to understand your rights. She suggests that you go to ssa.gov to create a login and access your statement. In fact, Leah suggests that it is a good idea to access your statement every year so you can verify your earnings record.

For more information about social security and divorce, check out Leah’s podcast: “The Divorced Spouse Social Security Benefit: You Need To Know This”

 

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