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June 07, 2023 at 04:14 PM
What You Need to Know
- It’s very likely that advisors will have to deal with divorced clients who need special help with retirement planning.
- The Social Security rules that apply when a married couple divorces are often misunderstood.
- One rule: The ex-spouse's benefit will not increase if they wait beyond full retirement age to claim it.
We all know the statistics: About 50% of marriages end in divorce.
It’s very likely that most advisors will be dealing with divorced clients who need specialized assistance when it comes to retirement planning. That makes it particularly important to understand the Social Security rules that apply when a taxpayer divorces a spouse.
Unfortunately, while the Social Security rules that apply when a married couple divorces are extremely important to understand, they are often misunderstood.
That can make retirement planning especially difficult for former spouses, who can also be in a more difficult financial situation than individuals who remain married well into retirement — giving advisors an important opportunity to add value when it comes to retirement income planning post-divorce.
Qualifications for Claiming Ex-Spousal Social Security Benefits
An individual may remain eligible to receive Social Security benefits based on their ex-spouse’s earnings record. The maximum amount of that benefit will be 50% of the ex-spouse’s primary insurance amount once the individual claiming the ex-spousal benefit reaches full retirement age.
To file an initial claim for Social Security benefits based on a former spouse’s earnings record, the individual’s ex-spouse must be living. The individual claiming the benefit must have been married to their former spouse for at least 10 years to qualify.
Furthermore, the individual must be single at the time they file their claim for benefits and must have reached age 62.
To claim based on an ex-spouse’s earnings, the ex-spouse’s benefit must be greater than the benefit the individual would claim based on their own earning history.
