Marriage, Divorce, and Social Security: What You Need to Know

Are you married and close to filing for Social Security benefits?  Divorced but married for at least 10 years in the past?  If so, there are some important variables to consider in your Social Security claiming strategy. 

In this linked article (Kitces on Spousal Benefits), financial planning guru Michael Kitces outlines the claiming options available to people affected by these scenarios, which potentially makes them eligible for the spousal benefit.  The claiming strategy hinges on eligibility and entitlement, as defined by the Social Security Administration.  Here’s the visual summary and commentary:

MARRIED

• If you are at least 62, married for at least a year and your spouse is already receiving his/her own Social Security (SS) benefit, you are entitled claim 50% of your spouse’s benefit at full retirement age (as defined by SS Administration).  
• You can claim a spousal benefit before your full retirement age, but benefits are reduced by 8.33% per year for the first 3 years of early claim, and 5% per year beyond that.  There is no additional spousal benefit for delaying beyond full retirement age.
• If you are also entitled to your own SS benefits (having collected them in your own working career), you will collect whichever benefit is higher (yours or your spouse’s) based on the deemed filing rule (unless caring for a child who is under 16/disabled or you are disabled).
• Some meet a special exception for a Restricted Application (born on January 1, 1954 or earlier), in which case you can receive the spousal benefit while delaying your own benefit (and accumulating a higher payout), but you must not claim before your full retirement age for the Restricted Application to be valid.

DIVORCED

• If you are currently at least 62, unmarried, but have been married for at least 10 years to someone in the past, and at least 2 years have passed since that divorce, and that former spouse is at least 62, you are entitled.
• You can claim a spousal benefit before your full retirement age, but benefits are reduced by 8.33% per year for the first 3 years of early claim, and 5% per year beyond that.  There is no additional spousal benefit for delaying beyond full retirement age.  
• Spousal benefits for divorcees are nullified if you remarry, although you would then be subject to the married spousal benefit rules with your new spouse.
• If you are also eligible for your own SS benefits (having collected them in your own working career), you will collect whichever benefit is higher (yours or your ex-spouse’s) based on the deemed filing rule (unless caring for a child who is under 16/disabled or you are disabled).
• Some meet a special exception for a Restricted Application (born on January 1, 1954 or earlier), in which case you can receive the spousal benefit while delaying your own benefit (and accumulating a higher payout), but you must not claim before your full retirement age for the Restricted Application to be valid.  

Benefits Strategy:  The penalty for early claiming is more severe for spousal benefits than individual benefits, so it generally makes sense to delay claiming until your full retirement age if your individual benefit (even at age 70) is less than the spousal benefit, you are healthy and your genetics project a long lifespan (82 years old is about the breakeven point on the differential between claiming at 62 vs. 66).  If you meet the requirements for a Restricted Application, take advantage of it if you have the financial wherewithal to delay your claim until your full retirement age.  It allows you to collect your spouse’s or ex-spouse’s benefit while accumulating a higher payout on your own benefits; ideally wait until your full retirement age to claim the spousal benefit and delay your own benefit until age 70, which compounds at a rate of 8% over those interim years.