Why Clients Shouldn’t Wait to Claim Ex-Spousal Social Security Benefits

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.

The ex-spouse is entitled to file for benefits even if their former spouse hasn’t retired or begun collecting Social Security benefits, as long as the former spouse is eligible to collect benefits and the two spouses have been divorced for at least two years.

What Clients Should Know About Claiming Ex-Spousal Benefits

As a general rule of thumb, advisors often recommend that individuals wait as long as possible to claim their Social Security benefits.

That’s because their benefit increases for each year that the individual waits past full retirement age to begin collecting benefits — and individuals who start collecting Social Security before they have reached full retirement age will have a reduced benefit for their lifetime.

That logic does not apply when it comes to collecting ex-spousal benefits. While individuals will have a reduced benefit if they claim before full retirement age, they will not be entitled to delayed retirement credits and an increased benefit if they wait past full retirement age to begin collecting benefits based on their ex-spouse’s earnings record.

Individuals who have two ex-spouses and who qualify based on either of those ex-spouses are entitled to choose the higher of the two ex-spousal benefits. However, once the individual remarries, they are no longer allowed to file for benefits based on their ex-spouse’s earnings unless their subsequent spouse dies, or the marriage ends in divorce or annulment.

In addition, when an ex-spouse claims their ex-spousal benefits, it has no effect on the amount of benefits that the former spouse and their current spouse are entitled to receive.

If the ex-spouse dies before the individual claims Social Security benefits based on that spouse’s earnings, the individual is no longer entitled to ex-spousal benefits (but may be entitled to survivor benefits based on the prior marriage).

Conclusion

Dealing with a divorce can be extremely complicated — especially from a financial standpoint. It’s important that clients understand their legal rights under the Social Security system to secure the income they need during retirement.

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