Reflections

Ex-’s with Benefits? Five Simple Rules on Social Security and Divorce

Inheriting Wisdom Attention Baby Boomers making Social Security decisions: know that your marital history matters. Baby Boomers have among the highest divorce rates of any generation and this population may be growing. The trend of “gray divorce” shows Americans over the age of 50 are divorcing more frequently than in the past. Knowing the rules on divorced spousal benefits and remarriage can have a substantial impact on your Social Security payments. Here are five simple rules:

Ten Years = Eligible

If you were married for ten years, you may be eligible to receive spousal Social Security Benefits or survivor benefits based on your ex-spouse’s working record. A spousal benefit is equal to 50% of the primary worker’s payment if you start taking benefits at your Full Retirement Age (FRA) generally 66 or 67, depending on when you were born). If your ex-spouse was a high earner, it is possible that half of his/her benefit is larger than your own. In this case, it makes perfect sense to claim a spousal benefit, even if you are divorced. For divorcees who survive their ex-, the survivor benefit is equal to the full benefit due to the primary worker. So if you are considering or underway with a divorce as your marriage is nearing the ten year mark, financially speaking it could be worth many thousands of dollars in Social Security payments to hold off until you reach ten years.

Remarriage Matters

You are not eligible for spousal benefits related to your ex- if you remarry. However, if you remarry and a second marriage ends in divorce (or widowhood), you can claim benefits from either spouse’s record as long as the marriages lasted at least ten years. While we all know the saying that love will find a way, also remember that remarriage could cause you to give up quite a bit in spousal benefit payments.

Remarriage rules are less stringent in the case of survivor benefits. If you remarry after age 60, the remarriage will not affect your eligibility for survivor benefits.

Age Matters

You must be at least 62 before you can claim any spousal benefits on an ex-’s record. If you’ve been divorced for at least two years, you can start taking benefits even if your ex- has yet to apply for payments themselves. For a divorce less than two years old, standard benefit rules apply; meaning spousal benefits cannot be claimed until the primary wage earner applies for their own benefits. If your ex-spouse is deceased, you can collect survivor benefits as early as age 60.

Patience Matters

If you decide to take a spousal benefit before your Full Retirement Age, know that your 50% benefit will be reduced – permanently – for every year you claim early. If you decide to claim benefits as soon as you can at age 62, you will receive just 32.5% of your ex-spouses benefit every year (this example considers a FRA of 67).

By waiting to claim benefits until you reach your Full Retirement Age you receive another advantage: the ability to choose between your own benefit or your ex-‘s. Just like married couples, divorced spouses can claim benefits and file a restricted claim for spousal benefits. A restricted claim allows you to receive spousal benefits while delaying receipt of your own benefits. How is this important? Because every year between FRA and age 70 that you delay benefits your payment increases by 8%, permanently. So, using our FRA of 67 example, you have the ability to earn 50% of your ex-spouse’s benefit between the ages of 67 and 70, while your own benefit grows by 8% every year. At 70, you can switch to your own benefit, now worth 132% of your original amount, which may have grown to be greater than half of your ex-‘s.

Privacy Matters

To apply for spousal benefits of an ex-, you don’t need to know their earnings history or even their whereabouts. The Social Security Administration (SSA) can find an ex-spouse’s records as long as you present proof of divorce and ten-year marriage. In fact, an ex- will not even be notified by the SSA if you begin claiming spousal benefits, and his/her own payments are unaffected. And if your ex-spouse has remarried it is not a concern, you still receive eligible spousal payments regardless of an ex-‘s current marital status.

Planning Matters

The timing of a divorce or remarriage is a deeply personal decision complicated by matters unrelated to personal finance. However, from a financial perspective, the five simple rules above do provide outcomes to consider. Anyone contemplating divorce just before ten years of marriage, regardless of age, might consider the impact on eventual Social Security benefits. And for widows and widowers in their 50s, postponing remarriage until after age 60 may drastically increase benefits.

How to Apply

To apply for benefits on your ex-spouse’s record, simply visit SSA.gov to apply online. You can also apply over the phone at 800-772-1213 or find your local office at SSA.gov and make an appointment.

Latest Reflections Post

Can the Small Cap Rally Continue?

Small cap stocks (as measured by the Russell 2000 Index) returned 22% in the final two months of 2023, nearly twice as much as the 12% return for large cap stocks (S&P 500 Index).