We help many clients who are going
through or have been divorced. A very
common question in these cases, or at least one which should be asked but often
isn't, is "What are the rules regarding Social Security in a
divorce?" I hope that my
explanation below clarifies this question somewhat.
The basic rules to collect on an ex
spouse are that a person must have been married at least 10 years and divorced
at least two years, and not be remarried.
The exes don't have to coordinate
their claiming strategies or even communicate with each other. They can collect benefits independently as
long as the ex-spouse is eligible for benefits, even if he or she hasn't yet
filed for benefits.
A divorced spouse can collect his or
her own reduced benefits as early as 62 but is subject to the earnings cap if
working while collecting benefits. This
year, $1 in Social Security benefits is lost for every $2 earned over this
year's limit of $14,640 (Source: www.ssa.gov)
But divorced people who wait until
their Full Retirement Age can restrict their claims to spousal benefits. That means they can collect half the full
benefit to which the ex is entitled at the normal retirement age (not including
delayed retirement credits) and delay collecting their own benefits until 70,
when they will be worth the maximum amount.
The divorced spouses can claim spousal
benefits, based on the other's earnings record, at the same time.
If this situation applies to you, you
should crunch the numbers to see if it makes sense for you, or hire us to crunch
the numbers for you.
A lower earning spouse may be better
off claiming reduced benefits early at 62, assuming he or she is no longer
working, or not earning more than the earnings cap. That way, needed benefits can be collected as
early as possible.
The reason collecting a reduced
benefit early might make sense is that the individual still would be eligible
for a much larger survivor benefit if the ex-spouse died first. As long as he or she is at least Full Retirement
Age, the individual would receive an unreduced survivor benefit worth 100% of
what the ex-spouse received during his or her lifetime, including any delayed
retirement credits.
In addition, the individual can
collect survivor benefits even if the ex-spouse remarried. It won't affect the survivor benefits of the
ex's last spouse.
If you would like more information on
this topic and more about Social Security in general we are having a free
educational seminar on this very topic on September 27, 2012 at the Mediterano
restaurant in Ann Arbor. Please email
lwhite@whitehousellc.com or call (734) 433-1670 to reserve your seat!
White House Financial
& Settlement Consulting helps families live easier and less stressful lives
through the proper management of their financial resources. We do this by acting as our clients’ trusted
advisor providing a personal touch customized to the client’s needs! Please visit our web site at www.whitehousellc.com
for more information!