Social Security retirement benefits are administered under a complicated set of rules that most participants don’t completely understand. Adding divorce into the equation can result in even more confusion.
Most retirees are aware that if you are married you may claim spousal benefits on your partner’s earnings, an especially helpful strategy if the spousal benefits would be higher than your own benefits. However, depending on your circumstances, you may still be able to claim spousal benefits when you are divorced, even if your ex-partner has remarried. If you are divorced or in the process of getting divorced, there are some important considerations concerning your Social Security benefits.
Whether you can still claim Social Security benefits as a divorced spouse depends on a number of factors, including how long you were married. Your marriage must have lasted at least 10 years, and you must be prepared to document that with your marriage certificate and divorce decree to claim spousal benefits on your ex-spouse’s benefit. You must have been divorced for two years to apply for ex-spousal benefits.
Waiting to get a final decree to meet that 10-year requirement is a strategy that many ex-spouses learn about too late. If you are in the process of getting divorced, a longer separation that moves you past the 10-year mark could be a smart move with significant implications for your income and financial well-being during retirement. You will still have to be divorced for two years before you can claim.
The next hurdle is remarriage. You are not allowed to claim benefits on an ex-spouse’s earnings if you remarry. However, if your ex-spouse has died and you remarry after age 60, then you can claim your ex-spouse’s benefit if it is larger than your benefit.
If you have been married and divorced twice and both marriages lasted more than 10 years, you may have a choice about which benefit to claim. If you’re at full retirement age (between 66 and 67 these days depending on when you were born), you can choose which ex-spousal benefit is larger as long as your benefit is less than half of your ex-spouse’s benefit if he or she is still alive or less than 100% if he or she is deceased.
But there is an exception to the remarriage rule for ex-spousal benefits as well. If someone is currently receiving ex-spousal benefits and the person he or she is marrying is also currently collecting ex-spousal or survivor benefits, they may both continue to collect the ex-spousal benefits.
Full retirement age
Full retirement age is the age at which you become eligible for full, unreduced benefits based on your work history. However, you can begin Social Security benefits, including ex-spousal benefits, as early as age 62, but the benefits will be sharply reduced (by up to 25% at age 62) to make up for those years of earlier payments. If you claim before full retirement age, you will only get the larger of your own reduced benefit or the ex-spousal benefit, which is also reduced for early payment.
It’s also important to note that there is an earnings test before full retirement age. If you are making more than $16,000 a year in earned income, you may have to pay back part or all of the early benefits you receive. If you are considering claiming early, be sure to seek out good financial advice on this decision so you don’t end up owing money.
One other crucial requirement for you to claim ex-spousal benefits is that your ex-spouse be eligible for Social Security benefits. Most people are, but some government workers may not have participated in Social Security, so it’s important to check. If you’re no longer in communication with your ex-spouse, you can visit your local Social Security office to confirm eligibility. Make an appointment and bring key documents like your marriage certificate and divorce decree and your ex-spouse’s Social Security number.
Divorce is very common, but that doesn’t mean it’s easy to understand how it impacts your Social Security retirement benefits. I recommend talking to a financial advisor if you have questions about the best claiming strategy for you — especially if you are divorced or in the process of getting a divorce.
Jim Ludwick, CFP, is the founder of MainStreet Financial Planning, Inc.
This article first appeared on NerdWallet July 13, 2016