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Social Security counseling for divorced spouses

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Do you know enough to help a divorced spouse make the best choice for starting Social Security retirement benefits?

The information set is not very large or complex. But it does include twists that you might not expect, and in these areas it’s easy for advice to be inaccurate and even harmful.

Here are the important points to know:

In general, a qualifying divorced spouse can receive the greater of the benefit earned on his/her own work record or the spousal benefit. At full retirement age, the spousal benefit is half of the benefit (Primary Insurance Amount) earned by the working spouse.

For example: Joan is divorced from Kevin and has earned a benefit of $1,000 per month on her own work record. He is entitled to $2,400 per month. At full retirement age (currently 66), she can receive $1,200, half his benefit.

A divorced person qualifies by meeting three tests:

    1. being age 62 or older;

    2. having been married to a worker at least 10 years; and

    3. not being remarried.

If a divorced person remarries and the second marriage ends before 10 years (due to death, divorce or annulment), Social Security usually will reinstate the divorced spouse’s eligibility under the first marriage, as if the second marriage did not happen.

A divorced person who qualifies for spousal benefits is subject to the same reductions for starting benefits early, before full retirement age, as any other spouse. Likewise, no person who qualifies for spousal benefits (including a divorced spouse) can earn Delayed Retirement Credits by delaying the start of benefits beyond full retirement age.

For married people, a non-working spouse generally can’t start benefits (on the working spouse’s record) until the working spouse files for benefits. But this is different for a divorced spouse, under Social Security two-year rule.

Even if the ex-spouse has not yet filed for benefits, the divorced spouse can file on his/her record starting two years after the divorce.

For example: Joan is age 64 and wishes to file for benefits as a divorced non-working spouse. She was married to Kevin, age 65, who has not yet filed for benefits. She can file now, if she has been divorced at least two years.

A divorced spouse qualifies for the same widow/widower benefit as a married spouse, which usually is 100 percent of the deceased spouse’s (or ex-spouse’s) benefit, plus any Delayed Retirement Credits the ex-spouse has earned. This is the case even if the ex-spouse has remarried.

Clearly, some people around retirement age, including same-sex couples, are making Social Security-motivated decisions regarding marriage. A person who has never worked can qualify for a spousal benefit by getting a marriage license.

On the other hand, a qualifying divorced spouse can lose access to a spouse’s work record by remarrying.

Financially speaking, the worst-case decisions are to:

    1. divorce just short of the 10th anniversary; or

    2. remarry a person who has earned a far lower worker benefit than the former spouse.

For details, see Social Security’s publication on the subject.

See also:

9 Social Security myths worth busting

A third of newlyweds are in the dark about their spouse’s finances

Breaking up is hell, especially for advisors and clients

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