In the late 1960’s, Walter Mischel, a psychologist at Stanford University, conducted a research study…
Surprisingly divorced spouses have more flexibility than married spouses in determining when and how to begin taking Social Security. In order to qualify for a divorced spousal benefit – equal to half of your ex-spouse’s full retirement amount – one must meet the following basic requirements: (1) your marriage must have lasted longer than 10 years, (2) you are currently unmarried, and you (3) are at least age 62.
Meeting the first three hurdles merely gets one in the proverbial divorced spousal benefits door. Once inside, there are a myriad of additional rules and a number of exceptions to those very rules that dictate when and how much in benefits one can receive! Here are some important things to keep in mind when considering divorced spousal benefits:
1. Jim must be entitled to benefits for Barb to receive divorced spousal benefits
a. Exception: If Jim has yet to file for benefits, but their divorce occurred at least two years ago, Barb can
receive divorced spousal benefits
2. Divorced Spousal benefits DO NOT receive Delayed Retirement Credits
3. Divorced Spousal benefits ARE subject to the earnings limit test
4. The amount of divorced spousal benefits Barb receives has no bearing on Jim’s benefits
Another important consideration for divorcees is divorced survivor benefits. If an ex-spouse were to pass away, the surviving ex-spouse can receive a maximum divorced survivor benefit – 100% of the deceased’s benefit – if the following requirements are met: (1) you are at least age 60, (2) you were married to the deceased for at least 10 years, (3) and you remain unmarried, with an exception. The exception allows one to receive divorced survivor benefits and remarry, as long as the new marriage occurs after age 60.
Lastly, it’s important to note that divorced spousal benefits can be used in conjunction with one’s own retirement benefits to truly maximize the amount of cumulative lifetime benefits. A simple example of utilizing each individual’s retirement benefits and a divorced spousal benefit is listed below:
1. Barb files for divorced spousal benefits of $1,000/mo at age 66, her Full Retirement Age (FRA)
2. She receives $1,000/mo from age 66 until age 70
3. At age 70 Barb switches over to her own benefits which have grown to $1,200/mo from $909/mo at her FRA
In this simple example, Barb would receive almost $70,000 in additional Social Security benefits over her lifetime relative to had she taken her own benefits alone at age 66! With 2,700 rules governing Social Security there are endless opportunities for retirees to potentially leave tens-of-thousands and in many cases hundreds-of-thousand dollars on the table over the course of a lifetime!
Please give us a call before you make your Social Security decision as we’d love to help ensure that you maximize the amount you receive from Social Security regardless of your situation!
(Note: hypothetical names were used in the above examples to simplify explanations)
Have a great day!
The All Star Team