Social Security and Divorce in Plain English

Social Security benefits can be difficult to understand. And trying to coordinate your Social Security to maximize your spousal benefit is even harder. But when you take social security and divorce together, it can be tortuous. Here’s an easy-to-understand primer on how to maximize social security payments if you are divorced.

How to Qualify for Social Security Benefits From a Divorced Spouse

In order to qualify for benefits you must have been married to your ex for at least 10 years. Also, you must be divorced at least 2 years before you make your claim. The final requirement is that you cannot have remarried. As long as all three conditions are true, you qualify for SSI benefits from your former spouse.

How much can you claim?

Of course you can always collect your own benefits if you qualify for Social Security. And you can make a claim as early as age 62. But of course if you do so your benefits will be lower than if you wait to make a claim until your full retirement age. Also, your benefits will be reduced by $1 for every $2 you earn at work over $14,640 in 2012.

If, as a divorced person, you wait until you reach age 66, you have more options. Of course you may still claim your own benefits but you can also elect to restrict your own benefits. If you do so, you can get half the full benefit your ex-spouse would get at full retirement age. Then, at age 70 you can switch back to get your own maximum social security benefit at age 70.

Pretty simple. I told you so.

When to use this strategy.

If you and you ex qualify for equivalent benefits at full retirement age, this is a good way to go for both of you.

When not to use this approach.

If you each qualify for very different benefits, this may not be a good choice. Let’s take an example.
Let’s say you former spouse’s SSI monthly benefit at full retirement age is going to be $2000 and yours is only $400. You are better off to take ½ of his or her benefit ($1,000) and stick with it. Your $400 full monthly retirement benefit is never going to catch up to the $1,000 you can claim as an ex-spouse. But it gets even better.

If you are between a rock and a hard place, you can even make your claim at age 62. Of course your $1,000 benefit will be reduced to about $700 per month. But if you are in dire straits, this might the time to take those benefits.

And there is an added benefit to this approach as well albeit rather gruesome. If your ex-spouse dies before you at or after the age of normal retirement, you’ll get 100% of his or her benefit. A cloud with a silver lining.

In summary, Social Security benefits for divorced people isn’t really complicated. Just remember that you can always claim your own benefit if you like. You can also restrict your own benefit, claim half of your spouse’s and then get your own maximum benefit at age 70. The bottom line is that there is no “one size fits all” when it comes to this question. You have to get out your pencil and crunch your numbers.

Are you collecting Social Security from a divorced spouse? What is your strategy? How did you decide which way to go?