Social Security Spousal Benefits: Not Just For Currently Married People

Over the past year, we’ve written a few blog posts about the benefits of delaying Social Security benefits claims, Social Security benefits for dependents, and the process of suspending of benefits after you’ve already started claiming them.

A common thread to these concepts – as well as to most of the creative Social Security claiming strategies – is that they are geared towards married couples, due to the fact that one member of the couple can be eligible for a benefit based on the work record of their spouse.

But there are at least two other groups of people for whom there might be creative ways to claim Social Security benefits based on the work record of someone else: widows/widowers (in the form of survivor benefits), and people who are divorced. We’ll leave survivor benefits for another time and just concentrate here on spousal Social Security benefits available to divorced individuals.

If you and your ex-spouse were married for at least ten years, then you are eligible to claim a spousal benefit based on their work record. Doing so has no impact on the benefit that your ex-spouse ultimately receives, and they might never even know that you’ve made a spousal benefit claim. Just as with married couples, the amount of the spousal benefit can be as high as 50% that your ex-spouse is entitled to at their Full Retirement Age (66 for folks born between 1943 and 1954).

As with most Social Security elections, there are some things you need to think through before filing a benefit claim.

The first thing to consider is your age when you file for benefits. If you file prior to your Full Retirement Age, then Social Security will pay you the higher of either the spousal benefit or your own earned benefit. What’s more, if you apply prior to your Full Retirement Age, the spousal benefit is reduced. If you claim a spousal benefit at the earliest possible time at age 62, the benefit is reduced all the way from 50% of your ex’s Full Retirement Age benefit to just 35%. Additionally, you will be subject to the earnings test: earn too much money, and your spousal Social Security benefit is effectively penalized away.

If you wait until your own Full Retirement Age, however, you get to choose between a spousal benefit and one that you’ve earned on your own. Just like someone in a married couple, you could elect to take a spousal benefit and allow your own earned benefit to experience delayed retirement credits. Your own earned benefit would increase by 8%/year from your Full Retirement Age until your age 70, at which point you could switch from the spousal benefit to your own. Additionally, the earnings test disappears after someone reaches Full Retirement Age.

Two other factors to consider are the age of your ex-spouse and how long you’ve been divorced. You can’t claim a spousal benefit until your ex is eligible to claim benefits. If they are eligible to claim benefits, then you have to have been divorced for at least two years prior to claiming a spousal benefit based on the work record of your ex-spouse.

Lastly, spousal benefits on an ex-spouse aren’t available if you’ve remarried, though you would likely be eligible for spousal benefits based on the record if your current spouse.

There are certainly a number of things to think through. But just as for folks in married couples, it’s worth the time and effort to explore alternatives to just claiming Social Security at the earliest possible moment. That’s why Woodward Financial Advisors explores all of the possible ways our clients could claim Social Security, be they married, single, divorced, or widowed.