Thought Leadership on Accounting and Finance presented by CliftonLarsonAllen.
Lady Nancy Astor is said to have told Sir Winston Churchill: “Winston, if you were my husband, I’d poison your tea.” His reply: “Nancy, if I were your husband, I’d drink it.”
We’ve talked in past articles about spouses coordinating their Social Security benefits to optimize their household income. But not everyone stays married for a lifetime. To cover all possible scenarios, we must also discuss coordinating your benefits with those of an ex-spouse.
Divorced-spouse retirement benefits: Who qualifies?
Access to Social Security benefits is not an item that is negotiated as part of a divorce settlement. In fact, both individuals can access spousal benefits just like a married couple if:
- The marriage lasted 10 years or more
- The divorced individual is currently unmarried and divorced for longer than one year
- The ex-spouse is entitled to Social Security retirement benefits and is at least age 62
- If divorced for fewer than two years, the ex-spouse needs to have filed for his or her own retirement benefits
How divorced-spouse retirement benefits are claimed
Here’s an example: Jane has a retirement benefit of $1,600 and her ex-husband, Jack, has a full retirement age benefit of $2,642; they are the same age and are divorced after more than 10 years of marriage. Jack has since remarried.
When Jane turns 66, she can restrict her own retirement benefits of $1,600 and take divorced-spouse benefits (based on Jack’s work history) of $1,321 (if she reached age 62 by the end of 2015, per the Bipartisan Budget Act of 2015). Although Jack has remarried, his marital status doesn’t affect Jane’s receipt of divorced-spouse benefits, nor does Jane’s receipt of divorced-spouse benefits affect Jack and his second wife in any way — they are not even notified of Jane’s collection of divorced-spouse benefits.
When Jack remarried he lost access to divorced-spouse benefits based on Jane’s work history, while Jane, at age 70, can stop her $1,321 of divorced-spouse benefits and take her maximized retirement benefit of $2,112.
Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor. CliftonLarsonAllen Wealth Advisors, LLC disclaimers
Click here for more Thought Leadership from CliftonLarsonAllen.