Ask Dana! A Column Where Personal Finance and Life Intersect
Hi Dana: I’m divorced. Would you help me understand what social security benefits are available for divorced spouses, and any important considerations to be aware of?
Navigating social security benefits if you are divorced—or thinking about divorce—can sometimes be confusing. Luckily, we have the perfect partner on our team who can review this for us. Lise Robinson, CFP®, is a CERTIFIED DIVORCE FINANCIAL ANALYST® and has extensive experience working with divorced clients as well as those considering the financial implications of getting a divorce.
Hi Lise: What are some important social security highlights for divorced spouses that you would like to share with our readers today?
Lise: Happy to help. The first thing to touch on is the concept of spousal benefits. Social Security was designed so that if one spouse earns significantly more than the other, the lower-earning spouse can claim benefits based on the higher-earning spouse’s income. In that situation, the spousal benefit is equal to 50% of the higher wage earner benefit, and these benefits do not necessarily go away upon divorce. However, there are a few rules that apply in order for you to claim benefits based on an ex-spouse’s income rather than your own:
- Your marriage lasted 10 years or longer.
- You remain unmarried. If you remarry, your benefit will be recalculated based on your own work history along with your current spouse’s income.
- You are age 62 or older.
- The benefit that you are entitled to receive based on your own work record is less than the benefit you would receive based on your ex-spouse’s work record.
- The ex-spouse needs to be eligible for benefits and be at least age 62 before you can apply for benefits. But as long as you have been divorced for at least two years, the ex does not have to apply for benefits before you can apply for yours.
If all these parameters hold true, you will be eligible for a benefit amount based on your ex-spouse’s income. It does not matter if your ex-spouse has remarried, and you do not need to know their earnings record or even their whereabouts. All you have to do is provide evidence that you were married (such as a marriage certificate) and identifying information, including the ex’s name, date of birth, and social security number (if available), and the date and place of marriage and date of divorce. From there, the Social Security Administration (SSA) can look up the ex-spouse’s record and you will automatically receive the higher of either your own work record benefit or the spousal benefit.
Another thing to keep in mind is the SSA’s definition of full retirement age (FRA) for both you and your ex. Filing for benefits before either of you have reached full retirement age will result in a reduction of benefits. FRA is typically age 66–67, depending on the year you were born. So, for instance, if you have reached FRA of 67 but your higher-earning ex is 62, your 50% benefit will be reduced based on what his benefit at age 62 would be.
Other considerations are the potential reduction in benefits if you have a government pension as well as the potential reduction in benefits due to earned income if you take early retirement benefits (prior to FRA) and are still working. In short, there are many variables regarding social security benefits regardless of marital status. Before you apply, be sure to do your homework!
Thank you, Lise! Please remember, readers, that seeking personalized advice from qualified professionals can make certain decisions, such as financial implications of divorce or when to take social security, much easier and less stressful.
Dana R. Mascalo CFP®, RLP®, AAMS®, C(k)P® is a Managing Partner with TrinityPoint Wealth, an independent SEC Registered Investment Advisory firm in Milford, CT and Charlotte, NC. Dana advises high net worth clients with complex needs and is sought after by individuals, families, business owners and executives all over CT and the United States. Acting as their personal CFO, Dana looks at a client’s entire financial life with a visionary lens, advising on investment portfolios, retirement planning, stock options, life transitions, exit planning for business owners, customized advanced cash-flow planning and multi-generational wealth transfer strategies.
This material presented is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product.
TrinityPoint Wealth, nor its investment advisory representatives are permitted to provide legal or tax advice, and nothing contained in these materials should be taken as legal or tax advice.