Most advisors know some of the basics when it comes to maximizing Social Security benefits for clients, even for those who are divorced. In a recent “Ask Carrie” blog posting on Schwab.com, however, Carrie Schwab-Pomerantz addresses some of the nuances around divorce and Social Security’s old age and disability benefits: who can file, when you can file and what the actual benefits are that an ex-spouse can receive.
Delivered in a Q&A format, Schwab-Pomerantz’s first question comes from a woman who is nearing 65, as is her ex-husband. She wants to know whether she has to contact her ex-husband before filing for the benefits owed to her. The reader is clear: She does not want to contact him.
Schwab-Pomerantz, a certified financial planner, responds by saying that, assuming she meets the marriage and divorce rules, the woman need not involve her ex-husband in the process.
“He doesn’t even have to have filed for benefits himself,” says Schwab-Pomerantz, president of The Schwab Foundation and chairwoman of Schwab Charitable. The ex-husband “only has to be eligible (at least age 62). As long as he’s eligible to collect, you’re eligible for a spousal benefit.”
She then points out that what will affect the reader’s benefits is the age when she files: “If you collect early, there’s a penalty in the form of a reduction of 25/36 of 1 percent for every month you’re ahead of your FRA,” or full retirement age. So if the reader starts collecting at her current age of 65, or 12 months before her FRA of 66, it “would permanently reduce your benefit by just over 8 percent.”
However, Schwab-Pomerantz notes that if the woman doesn’t know her ex-husband’s PIA — his Primary Insurance Amount, which is the benefit he will be entitled to at his FRA — “you won’t know exactly what your spousal benefit will be until you file. The Social Security Administration (SSA) can’t tell you anything in advance.”
Now, some basics directly from the Social Security Administration on the topic.
1. Who Is Eligible? 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.
Note: A divorced spouse’s benefit is equal to one-half of his/her spouse’s Full Retirement Amount or disability benefit, if the divorced spouse starts receiving benefits at his/her FRA.
FRA is the age “at which a person may first become entitled to full or unreduced retirement benefits,” says the SSA. FRA for people born in or before 1937 is 65; it increases by months until reaching those born between 1943 and 1954, for whom FRA is age 66; it increases again by months for those born between 1955 through 1959, until for those born in or after 1960, it’s 67. (See chart.)
Caveat: If you remarry, SSA points out, you generally cannot collect benefits on your former spouse’s record unless your later marriage ends. If your ex-spouse has not applied for retirement benefits, but can qualify for them, you can receive benefits on his or her record if you have been divorced for at least two years.
In the conclusion of her post, which addresses other specifics regarding a divorced spouse’s benefits, and survivor benefits for the spouse and children of a divorced couple, Schwab-Pomerantz addresses the issue of remarriage, which “can be confusing because the rules are different for spousal and survivors’ benefits.”
You must be unmarried to collect any ex-spousal benefit, but regarding survivor benefits, “if you remarry after age 60, you can collect on your ex’s record no matter your marital status. Plus, if you’ve survived more than one spouse, you can choose to collect on the one with the higher benefit — and even switch between them if, for instance, a spouse with a lower benefit dies before a spouse with a higher benefit.”
She ends by giving a shout-out to advisors, saying that while the Social Security Administration “does a pretty good job of explaining the details” on its website, “if you still have questions, you could look for a financial advisor who specializes in Social Security issues.”