by Aubrey Connatser and Guy Rodgers
For the increasing number of people who divorce late in life, the key concern is determining whether there will be enough money to live comfortably the rest of their lives.
People in their 60s and 70s may be too close to retirement to rebuild their finances after a divorce. These older people need to insure their security, and social security benefits can be an important part of the asset mix.
Social security benefits are based on how long a person has worked, how much money is earned, and when the person starts taking benefits. Social security retirement benefits can start at age 62. Full retirement age of people born between 1943 and 1954 is 66 years of age, while benefits max out at age 70.
Eligibility for certain benefits can also depend on marital status. For divorced, divorcing, and married people alike, the key is aggressively pursuing benefits. Claimants must not simply assume their eligibility, but must file to determine their benefits.
Those who might not otherwise qualify for benefits may be eligible for divorced spousal benefits. A divorced spouse can collect social security retirement benefits based on the work record of an ex-husband or ex-wife under strict conditions. For purposes of this explanation, the spouse filing on the benefits of an ex is the filing spouse. The spouse who earned the benefits being filed on is the earning spouse.
The rules for collecting divorced spousal benefits are as follows:
- Both the filing spouse and the earning spouse must be at least 62 years of age.
- The couple must have been married for at least 10 years and divorced for two years.
- The filing spouse must be unmarried at the time of filing. The marital status of the earning spouse is not a factor.
- The filing spouse cannot be eligible for a higher benefit based on his or her own work record.
- For the filing spouse to collect, the earning spouse must be entitled to receive benefits but does not have to be receiving them at the time of filing.
The filing spouse does not have to ask permission of the earning spouse to file and there does not have to be any contact between the exes during this process. Even if the earning spouse is remarried, this filing will not affect the right to divorcee benefits, nor will it affect his or her retirement benefits or that of a current spouse. Only if the filing spouse remarries will he or she become ineligible for these benefits.
Here is a true-to-life example of a divorced couple, both age 66, who filed on each other’s benefits. For four years, each of them received 50 percent of their ex’s full social security benefit, and it was perfectly legal. This kept their own benefits intact until age 70, when they switched to their own full benefit plus the 32 percent bonus that goes with delaying retirement benefits until 70. This strategy is applicable only to people born before 1954. Note that if a person qualifies for more than one set of benefits, in most cases he or she will collect on only the larger one.
A variation on the divorced spousal benefit is the divorced survivor benefit. If an earning spouse dies, after being married for at least 10 years and divorced for at least two years, the filing spouse can collect up to 100 percent of the amount the deceased was to receive. These benefits are available to divorced spouses as early as 60 years of age, or 50 if the survivor is disabled.
With the current increase in divorce among older people, and with people living longer, these benefits have become more important for supplementing the money available to people coming out of a divorce.
Social Security is an important part of retirement income, but it is not intended to provide for everything. It should be just one piece of a person’s overall retirement strategy. Family law attorneys are beginning to explain these benefits to their divorcing clients. Some even team up with a qualified planner with experience interpreting the arcane rules of social security.
Aubrey Connatser, of Connatser Family Law, can be reached at firstname.lastname@example.org. Guy Rodgers, of Guy Rodgers Private Wealth Strategies, can be reached at email@example.com. For more information on social security benefits, visit www.ssa.gov.