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If you are divorced, you may be aware that you can potentially claim retirement benefits based on your ex-spouse’s earnings record, but you may not fully appreciate how important the claiming strategy you select can be to your lifetime income.
As a divorced spouse, you may be eligible to receive a spousal benefit equal to 50 percent of what your former spouse will collect at his or her full retirement age — even if your former spouse has remarried. You will collect a permanently reduced benefit if you opt to file before you reach your own full retirement age.
You may claim a spousal benefit regardless of whether your ex-spouse has filed for his or her Social Security benefit. In order for you to collect, however, your former spouse must be entitled to Social Security retirement benefits and the benefit you would receive based on your own work history must be less than what you would receive based on your ex-spouse’s work history.
You will also have to show that:
- You are at least 62 years old
- Your marriage lasted 10 years or more
- You are currently unmarried
If your ex-spouse has not yet filed for his or her Social Security benefit, you will also have to show that you have been divorced for at least two years at the time you file for a spousal benefit.1 The amount of retirement benefits you receive has no impact on the amount of benefits your former spouse will receive. (Learn more: Divorce after 50)
Note that if you remarry, you generally cannot collect benefits on your former spouse’s record unless your later marriage ends due to death, divorce, or annulment, according to the Social Security Administration.
Social Security spousal benefit strategies for divorced spouses
Before you decide to file for Social Security benefits, it’s important to educate yourself about the strategies that exist, which can make a big difference in the amount of Social Security benefits you ultimately receive.
Be aware, too, that not all claiming strategies are available to all retirees.
“For retirees who don’t have $1 million or more in IRAs or savings, many times Social Security is their most important retirement asset,” said Scott Bishop, a financial professional with STA Wealth Management in Houston, Texas. “Some of the old “tried and true” strategies that were perfect candidates for divorced individuals who were married for more than 10 years are no longer available, so it’s very important to look at the variables to make sure that you make the right decision.”
When you claim affects what you receive
Like all who are eligible for Social Security, you may begin claiming benefits before your full retirement age, as early as age 62, but your benefit will be permanently reduced by up to 30 percent to reflect the additional length of time you will be collecting.
Some file early because they under saved and cannot afford to wait, while others may need the monthly income to cover medical bills, a loss of employment, or other unforeseen expense. By doing so, however, they are effectively leaving money on the table that they would otherwise be eligible to collect.
- If you expect to reach at least the average life expectancy, it may benefit you more to delay Social Security until your full retirement age so you can collect the full benefit amount to which you are entitled.
- If you can afford to cover your living expenses with personal savings, annuities, and pensions, you may even wish to delay filing for Social Security longer still.
For each year you delay beyond your full retirement age, your benefit will increase by 2/3 of 1 percent a month or 8 percent per year. Between 67 and 70 this can amount to a 24 percent increase. After age 70, delayed retirement credits no longer accrue.
“Taking the time to analyze the options can lead to gaining thousands of dollars that you otherwise might have walked right by,” said Leyla Morgillo in an email interview, a financial professional with Madison Financial Planning Group in Syracuse, New York. “There is no one-size fits all — longevity, history, and health play a big role in the decision-making process.” (Related: Drivers of Social Security check sizes)
Indeed, if you have an immediate financial need, are not working, or your medical history suggests you may not reach the average life expectancy, she said, it may make sense to start claiming a reduced benefit at age 62, the earliest opportunity.
The impact of filing strategies for ex spouses
To illustrate the financial impact that claiming strategies can have, let’s consider hypothetical “Nancy.” Note that the following example reflects only a limited range of filing options and variables. There are many factors that could impact the amount of your Social Security retirement benefit. The benefit filing option you choose should be tailored to your unique financial profile.
Nancy is age 64 and still working, but plans to retire next year when she will begin collecting both her pension and Social Security. She was married for 18 years and has been divorced for 5 years. At her full retirement age of 67, Nancy would be eligible to receive a monthly benefit of $1,400, increased by any annual cost-of-living adjustments.
Nancy’s ex-husband is also 64, and has not yet filed for his Social Security benefit, but he will be eligible to receive $2,400 monthly at his full retirement age of 67. Nancy’s full retirement age benefit is higher than 50 percent of her ex-husband’s benefit. Therefor she does not qualify for any spousal benefit from his record.
Because Nancy is filing for benefits at age 65, before her full retirement age, her monthly benefit based on her individual work history will be slightly less than $1,270. Including 2 percent cost of living increases, if she lives until age 90, she will have collected lifetime Social Security benefits of more than $.$474,400
Nancy could also wait until her full retirement age to claim Social Security, and begin collecting a monthly benefit equal to $1,486. Her lifetime benefit is this case would be more than $$512,700.
Cumulatively, she would collect roughly $38,300 more over her lifetime by delaying her filing to full retirement age.
If Nancy elects to start her benefits at age 70, the cumulative payout could exceed over $568,000, a $55,300 increase over starting benefits at her full retirement age or more than $94,000 over filing at age 65.
Take the guesswork out of your decision
Your Social Security retirement benefit is too important for guesswork. No matter how or when you choose to begin collecting your benefit, it’s a good idea to contact the Social Security Administration ahead of time. That way, you can get the information you need to make an informed filing decision.
If you have not done so already, you should also set up your “My Social Security” page on www.socialsecurity.gov . This is an easy and secure way to view your estimated benefits and earnings history so you can plan for retirement effectively. The Social Security Administration will use this information when it calculates your benefit, so be sure that it accurately reflects your work history.
It also may be wise to contact a financial professional well versed in Social Security filing strategies to help explore your divorced Social Security benefit options.
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Social Security strategy for married couples
The unexpected problems with early retirement
This article was originally published May 2020. It has been updated.
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1 Social Security Administration, “Benefits Planner: Retirement, If You Are Divorced.”
