How does divorce affect Social Security? Get what you’re entitled to.

Getting divorced doesn’t have to mean giving up Social Security benefits. Photo by Khachik Simonian via Unsplash.

Divorce has an impact on various aspects of the household finances. Social Security retirement benefits are an important part of the retirement puzzle for many people. Knowing how benefits are influenced by divorce is helpful for many people.

Basics of Social Security

As a reminder, once a worker has earned enough credits (40 quarters or 10 years of credited income, they are eligible for Social Security retirement benefits. The amount is based on employment history, so those with higher wages paid more in, and will receive greater benefits.

Anyone born 1960 or later gets their Primary Insurance Amount (PIA) at a Full Retirement Age (FRA) of 67. Those born between 1955 and 1960 will have a FRA of 66 and some months.

You can’t take your own Social Security benefits before age 62. You’re penalized for every month you claim early between age 62 and your FRA. If you wait until age 70 to start collecting your own benefit, you earn 8% per year in additional benefit amount. There’s no advantage to waiting past age 70.

Social Security is not a divisible marital asset

If you or your spouse has a (non-Social Security) pension, you’ll need to have it valued by your friendly Certified Divorce Financial Analyst ®. The nonemployee spouse is entitled to a share of the pension. The amount is dependent on the overlap between the working career and the marriage.

If employment started and ended during the marriage, the nonemployee spouse is entitled to half. Less overlap, less awarded to the spouse. So in a divorce, depending on the circumstances, you could end up with half the pension. Your spouse would have the other half.

(See more about pensions.)

Social Security doesn’t work that way. If you’re the higher earner and your marriage meets the eligibility rules (see below), then there is nothing you can do to prevent your spouse from collecting half your Social Security. No matter how angry you are with them!

However, their claiming does not change your benefit at all.

If you are the lower earner and you qualify, there is nothing your spouse can do to prevent you from collecting half of their benefit.

Eligibility to collect on ex-spouse’s benefit amount

This being a government program, there are some rules. Only half of the ex’s PIA is at stake. It doesn’t matter if the ex waits until they’re age 70 or you wait until you’re age 70 (subject to rule 2 below).

The amount you can collect is no more than half the ex’s PIA, which is the amount they receive at their Full Retirement Age. So if your PIA (or age 70) will be greater than half their PIA, no point in going after it — unless you turned 62 before January 1, 2016.

Before 2016, when you got to full retirement age and you were married (or divorced), you could “file and suspend” your benefits. In that way a spouse without Social Security could receive half, while they delayed the earner’s benefit until age 70. Similarly, a divorced person could file and suspend their own benefit. They would take their half on the ex’s record and delay their own until age 70.

Sounds like a neat trick! It’s only available for those who turned 62 before 1/1/16. The rest of us are now subject to “deemed filing”. At the time you file for benefits, you are “deemed” to be filing for all the benefits you’re entitled to. You don’t get them all, just the highest one.

If you file for half your ex’s benefits before you reach your own FRA, the benefit will be reduced.

Eligibility rules to file on your ex’s employment record

  1. The marriage must have lasted 10 years or more. If the marriage was any shorter than that, even by a day, you’re not able to collect on your ex’s benefit at all.
  2. If you’ve been divorced for less than two years when you file, you can only receive benefits if your ex is receiving benefits.

In other words, a spiteful ex can prevent you from collecting by delaying their own benefits. (This does happen with pensions sometimes.) However, they can only delay by two years.

3. If you’ve been divorced two or more years, you can collect on their benefit whether or not they are collecting. So no matter how spiteful the ex may be, they can’t stop you from collecting half their benefit. Even if you’re the one feeling spiteful, collecting won’t reduce their benefit!

Social Security retirement is income for the purposes of support. If you’re receiving benefits, then that can be used in the spousal support calculation.

How can I tell which benefit I should take?

Part of the discovery during the divorce should uncover Social Security statements for both of you. If you don’t have a paper copy, you can sign up for an account on the Social Security site and retrieve it electronically.

In general (for those who turned or will turn 62 after January 1, 2016):

  1. If your spouse is the higher earner, compare half their PIA to your full PIA. Is it bigger? If so, you’ll want to collect on theirs.
  2. If you’re the higher earner, you will want to collect your own.

People who have longevity in their family will probably want to wait to claim until age 70. The crossover between making more money because you start collecting earlier, at FRA, and making more money because you wait until 70, generally happens in the late 70s/early 80s.

So you don’t even need that much longevity for the age 70 strategy to work.

3. If your PIAs are roughly the same, take yours. See commentary above for benefits of delaying until 70.

Summary

Sometimes there are advantages to collecting Social Security on your ex-spouse’s record instead of your own. This is mostly done without any input from the ex-spouse, nor does it affect the ex’s benefits.

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