Divorce naturally affects many aspects of life, from your living situation to child custody. One aspect of divorce couples must consider is how divorce affects Social Security. Social Security law is a complex field, with rules and regulations changing year by year. The 2015 budget bill closed two benefit-boosting Social Security claim strategies—making understanding the connection between divorce and Social Security even more important.
Social Security Benefits of Marriage
Married couples have the special privilege to share each other’s Social Security benefits. Even if you do not work a day in your life, you can collect a portion of your spouse’s benefits from his or her gainful employment. When both individuals wait to retire until full retirement age, you receive 50% of each other’s Social Security benefits. Taking benefits earlier results in less money, depending on the timing. When a couple divorces, claiming Social Security is far more complicated.
Stipulations to Receive Spousal Social Security Benefits
The Social Security Administration has particular rules regarding Social Security and divorce. A divorced couple can receive spousal Social Security benefits if their marriage lasted at least 10 years. For this reason, many couples may choose to delay making a divorce official until after the 10-year mark—especially if they are close to the cutoff time or if they are an older married couple. Even if your spouse remarries after a divorce, you are entitled to his or her Social Security benefits if:
- You are not married
- Your ex-spouse is 62 years old or older
- You would receive greater benefits as an ex-spouse than the benefits based on your own work record
- You have disability or Social Security retirement benefits
The ability to collect the Social Security benefits of your ex-spouse does not affect his or her own benefits, or the benefits of his or her current spouse (if remarried). Both ex-spouses can collect Social Security benefits from one another simultaneously, unlike spousal benefits. If you have been divorced for at least two years, the law independently entitles you to receive ex-spouse benefits. This means that even if your ex-spouse has not applied for benefits, you are eligible and allowed to apply and receive them. If you remarry, you cannot claim your ex-spouse’s Social Security benefits unless your new marriage ends, either by divorce, death, or annulment.
Changes to Claiming Strategies
As of January 1 2016, the SSA has changed the claiming strategies to seal existing loopholes. One such change is the phasing out of the “file a restricted application” rule in the next four years. Divorced retirees over the age of 62 can file a restricted application to collect ex-spousal Social Security benefits from the ages of 66 to 70, while their own retirement benefits continue to accrue the 8% per year delayed retirement credits. If their own benefits become higher than their ex-spouses, they can switch. The new budgeting act closes this loophole.
The new rules also close the “file and suspend” benefits loophole. Now, only those turned their full retirement age on or before April 29 2016 can file and suspend Social Security benefits to earn credits. The new rules do not affect survivor benefits, who can still take reduced benefits at age 62 on their own record and switch to full benefits at full retirement age.
Knowing how retirement and Social Security benefits work in the event of a divorce can save you and your spouse significant amounts of money. Waiting until after the 10 year mark may be in your best interest to retain your eligibility to receive your ex-spouses Social Security benefits in the future. Waiting until the appropriate age to take out your benefits is also important, as is knowing the ramifications of taking out your benefits early. Understanding how divorce affects Social Security can help you make decisions regarding your marriage, retirement, and future.