Divorced retiree entitled to spousal Social Security benefits

Dear Liz: My daughter, 63, has been recently amicably divorced and receives a small alimony ($1,000). Her ex-husband of 30 years is a doctor who just retired. Is she entitled to part of his Social Security? Neither has remarried.

Answer: Because they were married for more than 10 years, your daughter should qualify for spousal benefits, which can equal up to half of her ex’s benefit at his full retirement age. That amount would be permanently discounted if she applies before her own full retirement age (which is 66).

The ex’s marital status doesn’t matter, although your daughter’s does. If she remarries, she will lose access to spousal benefits as a divorced spouse. This is just one of the ways that spousal benefits differ from survivor’s benefits, which are based on 100% of the earner’s benefit and which widows and widowers can receive even if they remarry after age 60.

Spousal vs. survivor benefits: a primer

Dollar mazeJudging from emails and comments, plenty of people are confused about how Social Security benefits for spouses and ex-spouses are supposed to work. That’s unfortunate, since these benefits can help many people get larger checks than what their own earnings record will give them. If you are or ever have been married to someone whose earnings are substantially greater than your own, you need to know how this works.

First, some basics. Spousal and survivor benefits are based on the work record of what I’m calling the “earner” (the other spouse). You can’t get both your own benefit (based on your work record) AND a full spousal or survivor benefits on top of that. You typically get the largest benefit for which you qualify. (In some cases, you’ll get your own benefit plus an amount that together equals the largest benefit for which you qualify.)

Here are a few key points:

Spousal benefits (for current and former spouses) are based on 50% of the earner’s benefit at the earner’s full retirement age. Full retirement age is currently 66 and will be 67 for people born after 1960. If the spouse applies for benefits before the spouse’s own full retirement age, the benefit will be permanently discounted.

  • If you’re currently married, the earner must have already applied for Social Security benefits for you to apply for spousal benefits. The earner does have the option to “file and suspend,” where the earner applies for benefits and then immediately suspends the application. That allows the spouse to apply for spousal benefits while the earner’s benefit can be left alone to grow.
  • If you’re divorced (but were married at least 10 years and haven’t remarried), the earner needn’t have applied to start Social Security benefits but the earner needs to be at least 62. If you remarry, you can’t apply for benefits as a divorced spouse unless that subsequent marriage ends.

Spousal benefits don’t reduce what the earner receives (or what other current and former spouses may receive).

If you wait until your own full retirement age to apply, you can start receiving spousal benefits and then switch to your own benefit when it maxes out at age 70. For high earners, this “claim now, claim more later” can add tens of thousands of dollars to the lifetime amounts you receive from Social Security. If you start benefits early, however, that option isn’t available to you.

Survivors benefits (for current and former spouses) can be up to 100% of the earner’s Social Security benefit. If the earner hadn’t begun receiving Social Security checks, the survivor’s benefit is based on what the earner would receive at full retirement age. If the earner was receiving Social Security when he or she died, the survivor’s benefit is based on that amount the earner was actually receiving. (This is why it’s often smart for the bigger earner to delay starting Social Security at least until full retirement age, if not longer, especially if the earner’s survivor will depend on that benefit.)

As with other Social Security benefits, applying for survivor benefits before you reach your own full retirement age will result in a reduced check. However, with survivor’s benefits, you can receive a reduced check as early as age 60. (The earliest you can get spousal benefits is 62.) The starting age is even earlier—50—if you are disabled and the disability started before or within 7 years of the worker’s death, or at any age if you take care of the deceased earner’s child who is under age 16 or is disabled and receives benefits on the worker’s record.

Unlike spousal benefits, a late remarriage won’t cut off your checks. If you remarry after you reach age 60 (or age 50 if you’re disabled), that marriage will not affect your eligibility for survivors benefits.

AARP has a primer about how to maximize your Social Security benefits that’s well worth reading. T. Rowe Price has a free calculator to help you determine the best time to take benefits. If you want a more robust tool, check out www.MaximizeMySocialSecurity.com for a $40 version that allows you to play with more

Survivor benefits: what you can expect

Dear Liz: Two years ago, I elected to start my Social Security benefits early, at age 62. My current benefit is $1,350 per month. My spouse, currently working, will be turning 62 next year and is also planning to take an early retirement benefit because of health issues. Her benefit is expected to be slightly more than my benefit at that time. If she dies before me, what can I expect to collect from Social Security as the spouse of someone who started benefits early?

Answer: If your wife dies before she begins receiving Social Security, your survivor’s benefit would be based on what’s known as her “primary insurance amount.” That’s the amount she would receive at full retirement age (which is 66 for those born between 1943 and 1954; after that, full retirement age increases gradually to age 67 for those born in 1960 or later).

Once she begins benefits, though, your survivor’s benefit is based on what she’s actually getting. So if she receives a reduced benefit, your survivor’s benefit is reduced as well. It would be further reduced if you, as a widower, begin taking survivor’s benefits before your own full retirement age.

You would not be able to get your own benefit plus a survivor’s benefit if your wife should die, by the way. You would get the larger of the two, but not both.

How divorced people can get spousal benefits

Dear Liz: I’ve been reading with interest your answers to questions about Social Security spousal benefits, particularly those available to divorced spouses. What if the former spouse is now remarried for more than 10 years, and the current spouse is receiving benefits? Are spousal benefits still available and how are they calculated?

Answer: The answer depends on whose earnings record we’re talking about, so a few pronouns might have helped clarify your question.

Let’s say you’re the earner. If your former spouse has remarried, then he is no longer eligible to receive spousal benefits based on your earnings record. Only divorced people whose marriages lasted 10 years and who are not married can get spousal benefits based on an ex’s earnings record.

If you’re the one hoping for spousal benefits, however, it doesn’t matter that your ex has remarried as long as you’re unmarried. Your ex’s current spouse and any previous spouses who qualify can receive spousal benefits. The amounts they get don’t affect any other spouse’s checks or the checks received by the earner (your ex).

Spousal benefits can be up to half the earner’s “primary insurance amount,” which is the check the earner would get if she started Social Security at full retirement age. The benefits are permanently discounted if the spouse or ex-spouse begins receiving them before his own full retirement age.

All my exes and Social Security taxes: a quiz

PolygamyThe questions I get about Social Security have made it clear how incredibly complicated this benefits system can be. So here’s a little story to illustrate one important facet of Social Security: spousal benefits.

Jack was a charming guy—maybe too charming. He enjoyed the ladies and the ladies enjoyed him, at least until they discovered they weren’t the only ladies in his life. This led to more than a little drama, and a few divorces.

Jack first married at 20, to Mary. Their marriage lasted 10 years and produced two children before breaking up. Mary went on to marry again and had a happy 30 years until her second husband died.

Jack’s second marriage was to Anne. That lasted five years. Anne never remarried.

After a few years playing the field, Jack married a third time, to Jo Beth. They separated after nine years and divorced a couple years later. Jo Beth remarried and had kids with her second husband. This marriage also ended in divorce after thirteen years.

For the past decade, Jack has been happily married to Dianne. Both are 62, but Jack has decided not to retire for a few years (all those divorces took their financial toll).

Now for the question: which of Jack’s wives qualify for Social Security spousal benefits based on Jack’s earnings record?

The answer: Mary and Jo Beth. Both were married to Jack for at least 10 years, and neither is currently married. Mary and Jo Beth also would be eligible for benefits based on their second husbands’ records (Mary as a survivor, Jo Beth as a divorced spouse) but they wouldn’t be able to claim more than one benefit. They would typically get whatever benefit is largest: the one based on Jack’s earning record, the one based on the second spouse’s earnings record, or the one based on her own earnings record.

Why wouldn’t Dianne qualify for spousal benefits, since she’s the current spouse? Because Jack hasn’t applied for his own benefits. That doesn’t matter to the former wives, since the ex’s cooperation isn’t required for them to start getting spousal benefits. The ex merely has to be old enough to qualify for retirement benefits (which you typically are at age 62.). If you’re currently married, though, you can’t start spousal benefits unless your “earner” has applied.

Jack could allow Dianne to start benefits with a technique called “file and suspend,” in which he would file for benefits and then immediately suspend his application. That would allow his own benefit to continue to grow while allowing her to get checks based on his earnings record.

So conceivably, three women and Jack himself eventually could be earning benefits based solely on Jack’s earnings records. The amounts the women get wouldn’t affect or reduce each other’s benefit, or his.

Most people can’t squeeze quite that much mileage out of the Social Security taxes they pay. But since spousal benefits could result in a bigger check than you might get on your own, they’re worth knowing about.


Divorced? You may qualify for half of ex’s Social Security

Dear Liz: Many years ago I read about spousal benefits based on an ex-spouse’s Social Security earnings record. Is there a minimum length of time of the marriage to qualify? How do I apply for this benefit? I am within nine months of retirement.

Answer: You can qualify for Social Security spousal benefits based on an ex’s work record as long as:

•The marriage lasted 10 years or more.

•You are 62 or older and unmarried.

•Your ex-spouse is eligible to begin receiving his or her own Social Security benefit (even if he or she hasn’t applied yet).

•Your own benefit is less than the spousal benefit you would get based on his or her work record.

Any benefits you receive based on his or her record won’t affect what your ex receives, or what his or her current or other former spouses receive.

As with regular spousal benefits, the amount you get will be permanently discounted if you apply before you’ve reached your own full retirement age (which is currently 66 and will climb to 67 in a few years).

Early Social Security start precludes switching later

Dear Liz: In a recent column, you noted that someone who chooses to obtain Social Security at age 62 on her own account is unable to switch to her spouse’s account at age 66. Is this true for a spouse who is older than the husband? My husband is one year younger than me. If I chose to start Social Security at age 62 on my own benefits, would I be able to switch to his when he retires at age 66 (and I would be age 67 at the time)?

Answer: You’ve actually got it a bit backward. Someone who waits until her full retirement age to apply for Social Security has the choice of starting with a spousal benefit (typically half of what the spouse gets) and then switching to her own benefit later, usually at age 70 when it’s reached its maximum level.

This is often a recommended strategy with two high earners, since the one receiving spousal benefits can “graduate” to her own, higher benefit later. If the spouse receiving spousal benefits was a lower earner, her benefit might not be as big as her spousal benefit at age 70, so there would be no reason to switch.

If you start spousal benefits before your own full retirement age, however, you’re locked in. You can’t let your own benefit grow and switch to it later.

For a program meant to benefit ordinary Americans, Social Security can be mind-numbingly complex. Fortunately, you can find good calculators at the AARP and T. Rowe Price websites to help you sort through your options.

How couples can maximize Social Security

Dear Liz: I will be 68 this summer and plan on working two more years. My wife retired in 2011 after turning 60. We would like to maximize our Social Security and are planning on having her take spousal benefits when I retire. When she turns 70, she can switch to her own benefit. How much of my benefit will she receive if she starts receiving it when she is 64 and I’m 70?

Answer: If your goal is to maximize your Social Security benefits as a couple, you should rethink having her apply before her full retirement age.

If she applies before she turns 66, she won’t have the choice of switching benefits later. The Social Security Administration will compare the benefit she has earned with her spousal benefit (basically half of your benefit, reduced by the fact that she is applying early). If her spousal benefit is larger, she will get her own benefit plus an amount of money to make up the difference between the two. What she won’t get is the option to let her benefit continue to grow so that she can switch to that larger check later. The option to switch is available only if she waits until her full retirement age to apply.

There are several good online calculators to help you compare your Social Security options, including ones at AARP and T. Rowe Price.