Divorced individuals are eligible to collect their own social security benefit or may be eligible to claim a “spousal” benefit of up to 50% of their former spouse’s earnings record, providing them with more options to maximize their retirement benefits.
To collect a spousal benefit based on a living former spouse’s earnings record, the following criteria must occur:
- Individual must not be remarried.
- Must be at least 62 years of age.
- Marriage must have lasted 10 years or longer.
- The individual’s own social security benefit based on their earnings record is less than the spousal benefit of their living former spouse.
- If the individual is at full retirement age (which varies based on the year of birth), they are eligible for payments that are 50% of whatever the ex-spouse would receive. However, if payments begin before full retirement age, they will be permanently reduced.
If divorced for fewer than two years, then the ex-spouse needs to have filed for their own retirement benefits before ex-spouse benefits will apply. But, if someone has been divorced for over two years, they are entitled to ex-spouse benefits even if their ex-spouse has not yet applied for retirement benefits but can qualify for them.
Also, any ex-spouse caring for their ex-spouse’s child, who is also their natural or legally adopted child and who is younger than 16, they can receive benefits regardless of their age. Benefits will continue until the child reaches age 16 or is no longer disabled. In this circumstance, one does not have to have been married for the 10-year period.
Under the Bipartisan Budget Act of 2015, which took effect April 29, 2016, a spouse cannot begin receiving benefits until the worker is actually claiming benefits, too. Workers are still able to file and suspend, but the spouse (or other dependents, including minor and disabled children) cannot receive benefits during the suspension. This does not apply to divorced spouses as they can continue to receive spousal benefits if the worker suspends benefits.
In addition, if there is more than one former spouse, they may be able combine different strategies. Let’s look at an example.
Hypothetical fact scenario (assuming that the ex-spouses are currently claiming benefits):
- Mary, age 66, was married to Don for 11 years and to Mark for 12 years.
- Mary has been divorced from both at least two years.
- Mary’s full retirement age (FRA) for social security is 66.
- Don is the higher earner of her former spouses, with a full monthly retirement benefit of $2,100.
- Mark’s full monthly retirement benefit is $2,000.
- Mary’s own full monthly retirement benefit (based on her own earnings record) is $900.
Strategy #1. Since Mary was born before January 2, 1954 and she has reached FRA, she can choose to receive only her divorced spouse’s benefit and delay receiving her own retirement benefit until a later date. Mary filed a restricted social security application to collect $1,050 in monthly spousal benefits based on Don’s higher earnings record. This $1,050 represents the 50-percent spousal benefit available from Don’s full retirement benefit of $2,100. Under the Bipartisan Budget Act of 2015, individuals whose birthday is January 2, 1954 or later, no longer have the option to take only one benefit at full retirement age. Under the new law, if one benefit is filed, effectively the individual is filing for all retirement or spousal benefits.
Strategy #2. Further, by delaying the collection of social security benefits based on her own earnings record, Mary’s account will continue to grow 8 percent per year until age 70 (due to delayed retirement credits). When she reaches age 70, she plans to switch to her own benefits based on her earnings record. Her worker benefit will have grown to $1,188 per month and will be higher than her spousal benefit of $1,050 per month. Again as stated in Strategy #1 this only works for individuals born before January 2, 1954. Anyone born after that date who files they are effectively filing for all retirement or spousal benefits.
Strategy #3. Before Mary reaches age 70, however, her other former spouse, Mark, passes away. Mark had delayed collecting his own social security benefits and, as a result, his benefit at age 70 is now $2,640 per month. Mary is eligible to collect a survivor benefit of $2,640 per month. This survivor benefit represents 100 percent of Mark’s monthly benefit.
If the former spouse is deceased, the requirements are slightly different. The surviving divorced spouse benefit will be based on 100% of what the deceased former spouse was receiving or entitled to receive at the time of his/her death, including his/her delayed retirement credits. If the surviving spouse remarried—but the marriage took place after they turned age 60 (age 50 if disabled)—they may be eligible for 100% survivor benefits on the deceased former spouse’s earnings record.
Certainly, the rules are complex and require a critical assessment of the individual’s financial situation. For help deciding on the optimal strategy for claiming retirement benefits, don’t hesitate to call to discuss your specific position.