Collecting Social Security on your ex – dead or alive!

Benefits depend on if you remarry and when.

When I go on public speaking tours around the country, I love to watch the faces of the audience when I talk about Social Security claiming strategies for divorced spouses.

The response from some audience members can be described as shock and awe.

But like all Social Security benefits, precise rules must be followed. And based on the questions I receive from InvestmentNews readers, those rules can be quite confusing.

(Cut through the confusion of adviser misconceptions about Social Security claiming for couples.)

In order to collect Social Security benefits on an ex-spouse, the marriage must have lasted at least 10 years and both parties must be at least 62. As long as a person is currently unmarried, the Social Security rules say he or she can collect benefits on an ex-spouse if not entitled to higher benefits on his or her own record.

That last part confuses a lot of financial advisers and their clients.

Just as with married couples, a divorced spouse can collect reduced Social Security benefits as early as 62. But any time you collect a benefit before full retirement age — currently 66 — you will not receive the largest benefit to which you are entitled. You cannot choose between collecting your own benefit or a spousal benefit if you claim before full retirement age.

But if you wait until 66 to claim Social Security, you can restrict your claim to spousal benefits only and collect half of your spouse’s — or ex-spouse’s — full retirement age benefit while deferring your own until it is worth more later.

In the meantime, you can accrue delayed retirement credits worth 8% per year for every year you postpone claiming up until 70. At that age you can switch to your own retirement benefit, which would be worth 132% of your full retirement age benefit plus intervening cost-of-living adjustments.

In addition, divorced spouses enjoy one privilege that married couples do not. A divorced spouse can collect benefits based on an ex-spouse’s earnings record even if the ex has not yet begun collecting benefits. But to exercise this option, you must have been divorced at least two years.

One reader recently e-mailed me asking about the claiming options for one of his clients who had been married and divorced twice. The first marriage lasted more than 10 years and the second one for 22 years.

“Can you claim Social Security benefits on either ex-spouse’s earnings record or do you lose the ability to draw off the first spouse because you remarried, even though you divorced again?” the adviser asked.

You can use the earnings record of either ex-spouse as long as the marriage lasted at least 10 years and you are currently unmarried. You can choose to claim on whichever spouse would result in a higher Social Security benefit.

“Can an ex-spouse claim benefits on a former spouse’s earning record if the ex-spouse remarried and the new spouse is still in the picture?” another reader asked.

That’s a confusing question because I’m not sure which ex has remarried. So here is the answer to both sides of that question.

To claim benefits on an ex-spouse, you must be currently unmarried. But if your former spouse has remarried and you have not, you can still claim Social Security benefits on your ex and it will not diminish the benefits of his or her current spouse.

“What happens when an ex-spouse dies?” another adviser asked.

As a surviving divorced spouse, you are entitled to collect survivor benefits worth 100% of what the deceased worker was receiving or was entitled to receive at the time of death, even if the deceased worker remarried and has a surviving spouse. That compares with a spousal benefit that is worth 50% of a worker’s benefit if collected at full retirement age.

And you can continue to collect benefits as a surviving spouse or surviving divorced spouse if you wait until 60 or later to remarry, assuming the survivor benefits are higher than those you could collect on your new spouse.

That prompted one reader to muse that some ex-spouses are worth more dead than alive!