By Renee W. Senes, CDFA
Many people overlook Social Security benefits when getting divorced. While these benefits are not assets that a divorce court can divide, the rules about benefits are relevant to your post-divorce life. This is especially true for those getting divorced in their later years.
If you are divorced, but your marriage lasted 10 years or longer, you can receive benefits on your ex-spouse’s record (even if he or she has remarried) if:
• You are unmarried;
• You are age 62 or older;
• Your ex-spouse is entitled to Social Security retirement or disability benefits and
• The benefit you are entitled to receive based on your own work is less than the benefit you would receive based on your ex-spouse’s work (1/2 of his/her benefit at full retirement age).
If your former spouse dies, you may be eligible to receive survivor benefits of 100% of your former spouse’s Social Security benefit. The basic requirements are:
• Your marriage lasted at least 10 years
• You are at least 60 years old, and
• You are not entitled to retirement benefits equal or greater than that of your former spouse’s benefit.
One issue that certainly needs to be addressed is that the social security regulations require that
you may receive benefits if your ex can qualify for them i.e. is at least age 62. However, if your ex has not applied for benefits you can receive benefits on his or her record only if you have been divorced for at least two years.
This two year restriction is of critical importance to an older couple contemplating divorce.
Let’s look at this hypothetical case:
Bob and Carol are getting divorced after 30 years of marriage
Bob is 66 (full retirement age for social security purposes) but intends to delay taking social security until age 70 to maximize his benefit.
Carol is 62 with minimal social security of her own.
Because Bob has not applied for benefits, even though he is eligible, Carol will not be able to collect on his social security until the couple has been divorced for 2 years.
What are some options for this couple?
- Spousal support for 2 years until Carol can collect social security benefits on Bob
- An unequal division of assets to give Carol income potential from the additional assets
- Delay the divorce until Bob begins to collect.
Please do note that Social Security underwent a major change in December 2015 which eliminated many previously favorable filing strategies. Among these was the File and Suspend strategy which is no longer available. One strategy that may still be open to you, assuming you meet all of the previously mentioned requirements, is a restricted application for spousal benefits. This is the ability to collect ½ of your former spouse’s benefit at your full social security retirement age and then switch to your own benefit, which will have increased by 8% per year, at age 70. This strategy is only open to those who were age 62 by December 31st, 2015.
Each situation for an older couple is different. A gap in ages may make social security claiming strategies unworkable or irrelevant. Still it is important to know your benefits and those of your spouse. Create an account for yourself at www.ssa.gov. Print out your benefit statement and request that your spouse do the same.