In all of my presentations and consultations I ask the question about prior marriages. When there are potential claiming opportunities as it relates to claiming Social Security, I leave no stone unturned. Many people are unaware of the fact that if you were married and your spouse dies or if you were married for at least 10 years (consecutive) and the marriage ended in Divorce you may be eligible to receive benefits based upon their earnings record!
Survivorship Benefits
Once you’ve been married for 9 months you are eligible for survivorship benefits, except in the case of an accident (thus there is no waiting period). One can collect reduced survivorship benefits (28.5% reduction) as early as age 60 or age 50 if disabled. However, if you’re still working you are subject to the Earnings Test (lose $1 in benefits for every $2 you earn above $22,320 per year). As I type this newsletter I received a phone call from a retiree who claimed benefits at age 63 and now SSA is requesting that he payback $23,300 in benefits! Rule of thumb – if you’re going to work, you shouldn’t claim! Once you reach your FRA you can claim full benefits and the Earnings Test if no longer in play.
Whose benefits should you claim?
You get the greater of the 2 benefits, you do not get both! Thus, it is of extreme importance to know whose benefits you should claim and that is where my analysis comes into play. As a general rule, if your survivorship benefits are greater than your own benefits, you should claim your own benefits at age 62 and wait until FRA (67) to claim survivorship benefits. If your benefits are greater, you should claim survivorship benefits at 60 while postponing your own benefits until 70. It’s been my experience that almost 100% of the widows I’ve consulted with, were told by the folks at SSA to take the higher benefit immediately. The problem with this advice is that they might be under a 28.5% lifetime reduction if they claim at 60, this penalty could be in play for several decades costing them thousands of much needed dollars!!!!
NOTE: If you remarry prior to your 60th birthday you will be unable to claim survivorship benefits!
Divorced Benefits
If you are divorced and were married for at least 10 consecutive years you may be eligible for spousal benefits on you ex’s record. If your currently unmarried you are eligible to receive the greater of 50% of your ex’s PIA (check at Full Retirement Age) or you own benefits. In most cases 100% of your own benefits will be greater than 50% of your ex’s benefits. Should you claim prior to your FRA both spousal and your own benefits will be subject to a reduction (Example: If you FRA is 67 and you claim at 62, your subject to a 30% reduction in benefits) and the Earnings Test is still in play. If your receiving spousal benefits and you remarry, checks will stop!
That’s Not Fair
Prior to the Bipartisan Budget Act in 2015, one was able to claim spousal benefits at FRA, while delaying one’s own benefits until age 70. That law was phased in over several years, but anyone born after 1953 lost the ability to choose this option!
Read the Obituaries
A couple of months ago I consulted with Neil (62) as to his Social Security claiming options (See attached), he informed me that he was married for 13 years, got divorced in 2012 and his ex passed away in 2018. Since he did not remarry prior to age 60 he was eligible to receive survivorship benefits on his ex wife, while delaying his own benefits until age 70. That means he’ll receive over $155,000 over the next 8 years, while delaying his own benefits until 70! His own check at age 70 is $2,200 more per month or $26,400 per year. Should he live until age 85 he would be $374,000 better off than claiming on his own record at 62. I told him that was the best $250 he will ever spend!
Side Note: Several years ago I had another gentleman who was claiming survivorship benefits on his ex wife, he had some health issues and the doctor gave him 6 months to live. We switched back to his own benefits at that time since they were greater than his survivorship benefits. Good News – Bad News, he got a new doctor, quit smoking and lost weight and he is still with us and going strong as a matter of fact I played golf with him last month. Bad News we had switched to his own record!
Documentation
If you are divorced and think you might be eligible to receive benefits on an ex spouse, you’ll need to prove to SSA that you were married (Marriage Certificate) and divorced (Divorce Decree).
Have a Great Month,
