Getting a divorce doesn't necessarily divorce you from your former spouses Social Security benefits. If you were married for at least 10 years and not remarried, you are eligible to collect income benefits from your former spouses Social Security earnings record without them ever knowing. There can be multiple ex-spouses that meet the criteria for collecting divorcee benefits as long as they each did at least a 10-year hitch. Both the individual and ex-spouse must be at least age 62 and divorced for at least 2 years, however the 2-year waiting period is waived if the individual is collecting benefits. The individual’s current marital status does not affect the ex-spouse's benefits. The individual does not have to file for benefits for the ex-spouse to begin collecting income benefits. There are four rather important things to be aware of when divorced or making the decision to dissolve a marriage.
There is a benefit reduction for starting benefits before your Full Retirement Age. If you have a work record of your own, you will receive the greater of your benefit or that of your ex-spouses if you start before your full retirement age because of the Deemed Filing Rule. This forfeits the planning opportunity to collect from your ex-spouses benefit while accruing 8% deferred retirement credits on your own record until age 70.
Waiting until full retirement age allows you to choose between the benefit of your ex-spouse or your own. Prior to that, if you are working and earning greater than $15,120, there is a benefit reduction of $1 for every $2 of earnings over that threshold. The earnings limit increases in the year of full retirement to a $1 reduction for every $3 earned over $40,080. I've seen people turn 65, go on Medicare and have their income go up because the health insurance deduction drops off their paycheck causing their wages to increase, triggering the benefit reduction, an unforeseen pitfall.
There is a survivor benefit for a divorcee that is based on their former spouses work record. Upon their death, the survivor has the opportunity to collect the greater of their own benefits or the survivor benefit of their former spouse. That can more than double the ex-spouse income benefit. Again the 10 years of marriage rule and not remarried status applies.
Some divorce attorney's will try integrating future ex spousal Social Security benefits into a divorce settlement. In other situations, even when qualified, divorcee Social Security benefits are never put on the table or even given mention as to what the future benefits might be or what strategies to employ in accessing them. If you are short the 10 years, it might be in your best interest financially to delay the legal dissolution of the marriage especially if you are a significantly lower wage earner or have no earnings record.
Tom Brown can be reached at (860)794-6294. Live Q & A Calls Thursdays @ 1:00 PM EST by calling (800)746-4352 Passcode 9873351.