A big part of divorce is figuring out the impact ending your marriage will have on your finances. The obvious concerns are what it means for your present lifestyle, but you can’t ignore the consequences on retirement. That means understanding the Divorced Spouse Social Security benefit. There are lots of rules and caveats for this benefit and it’s hard to remember them all …
Joining me for this Conversation is Leah Hadley from Great Lakes Financial Solutions. Leah is a seasoned financial professional and is committed to helping her clients make wise financial decisions before, during and after divorce. Leah as a free Divorce Recovery: A Financial Guide To Moving On available for download.
Listen in or keep reading to learn more.
What Is The Divorced Spouse Social Security Benefit?
In a nutshell, if your marriage lasted 10 years or longer, you may be eligible to collect on your ex spouse’s social security record.
You might think this would set the stage for some arguments in the divorce negotiations but another important fact to know is that your spouse’s social security benefit is completely unaffected.
“In fact, your ex does not need to know that you’re collecting on their record at all,” said Hadley. “You don’t need to contact them. You just work directly with the social security office to make it happen.”
Ten Years Is A Magic Number
The first hurdle you have to get over to qualify for the benefit is that your marriage lasted for at least ten years.
“I’ve seen some cases where people were just a few months shy of that 10-year mark,” said Hadley. “If they could have just extended out even just the process a little bit longer, they would have been eligible for the benefit.”
This is one reason to consider a legal separation instead of a divorce. A legal separation means you are still married (and not free to marry anyone else) and so that could help you over that 10-year hurdle.
Know Your Benefit
If you’re serious about understanding the financial impact of divorce, then you want numbers. That starts with pulling your own social security statement. It’s easy. Go to ssa.gov, create a login and then you can access your statement anytime.
It’s actually a good practice to access your statement every year. Doing that will allow you to verify your earnings record and watch that the SSA hasn’t made a mistake.
But it’s not just your statement you want. You want your STBX’s as well. And in a perfect world, they would voluntarily share it with you during the divorce negotiations. If they’re not willing to do that, you may have to enlist some legal help.
How Much Is The Divorced Spouse Social Security Benefit?
The divorced spouse’s benefit is equal to half your spouse’s benefit.
“You actually first claim your benefit and then Social Security will be paying you the difference between the two,” said Hadley. “If 50 percent of your ex’s benefit is higher than yours, you would want to make sure you claim both benefits.”
Unlike your own benefit, if you delay claiming the divorced spouse benefit, there is no increase in the amount that is payable.
When Can You Claim?
Like so much else with Social Security, when you can claim the divorced spouse benefit depends on several factors.
First, you have to be eligible to collect Social Security in your own right which could be early retirement age of 62, could be standard retirement age or even later. You also need to have been divorced for at least two years.
Then, your ex must also be eligible to collect.
“If your ex is eligible for social security but is choosing not to collect on it, you still can collect on their record,” said Hadley. “You don’t have to wait until they’re taking it.”
Now, if your ex is younger than you, then you would start collecting social security on your own record and then when your ex becomes eligible, you can start collecting any additional amount from that benefit.
Whether you should start claiming social security as soon as you’re eligible needs to be determined in the bigger context of your overall financial plan.
What If Your Ex Dies?
Being eligible for the divorced spouse social security benefit sounds great but what if your ex dies before you can start drawing that benefit?
Hadley says that in this case, provided you were married for that magic 10-years, you may be eligible for a surviving divorced spouse benefit. That benefit is similar to a widow or widower’s benefit and may mean you can get the full amount of ex’s benefit.
Be Careful About Getting Remarried
To be able to claim the divorced spouse benefit, you have to be unmarried at the time you claim it. The surviving divorced spouse benefit however is available even if you remarry after the age of 60.
It’s also possible that once you do remarry, your benefit would change to be driven by your current spouse’s record. So, before you actually say, ‘I do’ again, it would be smart to check with Social Security on what will happen to your benefit.
If You Have A Public Pension The Rules Are Different
If you work in a job where you are contributing to a public pension arrangement, then you may not be eligible for any social security or a very limited amount. Typically, these public pensions cover teachers, police officers, and fire service personnel, for example.
There is a calculator on the Social Security Administration’s website that can help you figure out if you’d get a social security benefit.
Hadley points out that the division of assets should be handled differently if there is a public pension because a public pension is a divisible asset in divorce and social security is not.
If one person is contributing to that pension and not contributing to social security, and their spouse is contributing to social security” said Hadley, “it may not be real equal if you just divide the pension.”
Simply dividing the pension, means each spouse gets half the pension while the one spouse still gets their full social security benefit in addition. What may be more equitable would be to offset the public pension benefit by the social security benefit and then divide the remaining difference.
Get Expert Help
Understanding the divorced spouse benefits from Social Security is going to be helpful in assessing the impact of divorce on your financial future. When it comes to deciding whether to start drawing the benefit, you will want to ger some expert advice.
You can start by visiting the SSA.gov website and playing around with the calculators available online. You can also visit your local Social Security office although Hadley says getting accurate advice can be hit or miss. For that reason, she often advises two visits and dealing with different people.
You may also find it helpful to work with a financial planner who has a social security planning background.
Joining me for this Conversation is Leah Hadley from Great Lakes Financial Solutions. Leah is a seasoned financial professional and is committed to helping her clients make wise financial decisions before, during and after divorce. Leah as a free Divorce Recovery: A Financial Guide To Moving On available for download.