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What You Should Know About Social Security if You're Divorced

Insights & Ideas Team •  July 15, 2015 | Your Finances

When it comes to Social Security, there are strategies you can use to maximize your monthly benefits. If you’re divorced, however, you might be surprised to know that there are a few strategies designed specifically for you—and several of them involve taking advantage of your ex-spouse’s benefits.

Before you consider these strategies, don’t underestimate the importance of timing in your decision. Whether you’re married or divorced, the size of the Social Security check you get each month will depend on when you start taking monthly payments.

There are three milestones that will impact your benefits: age 62, your “full retirement age” (FRA) of 66 or 67 (depending on the year you were born), and age 70. The earlier you take benefits, the lower the monthly amount will be. If you postpone payments beyond your FRA, your delayed retirement credit of 8 percent per year can really add up.

The following chart, based on someone who’s eligible to receive $1,000 a month at FRA, demonstrates how each year you wait will increase your monthly income for the rest of your life:

Difference In Monthly Benefits Graph

With that timing decision in mind, check out these three strategies for divorced individuals:

1. Your benefits or spousal benefits? For spouses who have a shorter work history or didn’t earn as much during their career, Social Security offers the option of taking a spousal benefit of 50 percent of the primary earner’s benefit. That spousal benefit is available to ex-spouses if you were married for 10 years or more, have been divorced for more than two years and are not remarried.

For example, if you are at FRA and eligible for a benefit of $800 a month, but your ex-spouse’s FRA benefit is $2,500 a month, you would be better off taking the spousal benefit of 50 percent of that amount, or $1,250 a month.

If you have two ex-spouses and were married to each at least 10 years, you can choose spousal benefits from whichever ex will get higher benefits. And, if you turn 62 by the end of 2015, you can take the spousal benefit at your FRA, let your own benefits grow through delayed retirement credits and switch to your own benefits at age 70.

Your spousal benefits will have no impact on your ex-spouse’s benefits or that of his or her new spouse. In fact, your ex-spouse will not be notified when you start receiving benefits.

Social Security Whitepaper2. Survivors benefits. Widows and widowers are eligible to receive reduced Social Security survivors benefits as early as age 60 and full benefits (100 percent of the deceased spouse’s benefits) at FRA. If you’re divorced and your ex is now deceased, you are eligible for survivors benefits, too, as long as you were married for at least 10 years before the divorce.

You can even remarry and continue to receive survivors benefits as long as you wait until age 60 to remarry.

Let’s look at Carrie, who was married for 25 years and divorced at age 50. At age 55, her ex-husband died, and five years later, she began taking survivors benefits. At age 62, she met someone and remarried. She now will have three choices: 1) continue to take survivors benefits, 2) take spousal benefits from her second husband or 3) take her own benefits.

Furthermore, she can continue to take the survivors benefits from her ex-spouse while her own benefit continues to grow through delayed retirement credits. At age 70, she may switch to her own higher benefits. The law lets you choose whichever eligible benefit is biggest.

The eligibility rules are different if you are disabled or are taking care of an ex-spouse’s child who is disabled or under the age of 16. You can get more information on the Social Security Administration’s website.

3. File and suspend. Editor’s note: Legislation signed into law on November 2, 2015 will eliminate file and suspend for people who have not turned their Full Retirement Age and taken advantage of this strategy by April 30, 2016. Download our free Social Security guide to learn how you can still maximize your Social Security benefit. 

For divorced individuals who have not remarried, Social Security used to provide a little more security in the event of a catastrophic illness or financial setback, with a strategy known as “file and suspend.”

Let’s say you plan to delay taking benefits until age 70 to build up higher monthly benefits. Under the old law, you could file for benefits at FRA and then immediately suspend them, which meant your benefits would be delayed until 70. Should you have a change of heart, you were entitled to request all of your back benefits from your original filing date. So if at age 68 you got cancer, you could request a lump-sum payment of every month’s benefits dating back to your month of filing. Depending on your suspension date, the amount could equal tens of thousands of dollars.

The new law eliminates this strategy for any suspensions occurring after April 30, 2016 . This gives a window of opportunity for you to still take advantage of this strategy if you turn your full retirement age between now and then.

Social Security offers exceptional flexibility in choosing between your own benefits and an ex-spouse’s, but it can get complicated. It’s important to work with a financial professional to assess your personal situation. Make sure to let your financial professional know if you are widowed or divorced so he or she can look at the strategies that work best for you.

For more information on Social Security strategies, download the Northwestern Mutual white paper “Social Security Simplified.”

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