CHICAGO (Reuters) - Robin Brewton, who advises clients on Social Security benefit strategies, has boosted retirees’ financial security with a single question: Are you divorced?
It is a little-known fact: If you’re divorced, it’s possible to claim Social Security spousal and survivor benefits from your ex. It is a strategy that can dramatically boost your benefits - and it will be important for more retirees in the years ahead.
Brewton is vice president of client services at SocialSecuritySolutions.com, which advises clients on benefit strategies. One client, whom Brewton declined to name to keep her privacy, saw her monthly benefit rise to $2,200 from the $900 she’d anticipated when Brewton alerted her about the divorced spouse rules.
Her client was a divorced senior who never earned much money during her working years. At retirement, she was set to file for her meager $900 monthly Social Security benefit - until she learned she could claim for a survivor benefit on her deceased ex-husband’s earning record.
That turned out to be the difference between living in poverty and a much more comfortable retirement: the client’s late ex was a high-earning physician, and she is collecting a $2,200 monthly benefit.
The Social Security Administration reports that in 2011, 6.7 percent of all beneficiaries receiving spousal benefits were divorced; 10.4 percent receiving survivor benefits were divorced. But the divorce rate among adults ages 50 and older doubled between 1990 and 2009, according to a study published last year by the National Center for Family & Marriage Research at Bowling Green State University.
“Many older people who go through a divorce think that once it’s final, they have no claim to any Social Security benefit from their ex-spouse,” says Brewton. “Women, especially, will be able to have higher benefits and enjoy a better standard of living if they make the call to the Social Security Administration and ask about their eligibility for a divorced spouse benefit.”
Spousal and survivor benefits are among Social Security’s most valuable features for married couples. You can claim half of a spouse’s benefit if you are at full retirement age (currently 66), assuming that is higher than your own full benefit. And, you’re entitled to 100 percent of a deceased spouse’s benefit.
If you’re divorced, you can take advantage of most of those same benefits, if you are currently single, and have been married to your ex at least ten years; at least 62 years old, which is the minimum Social Security eligibility age; and not already receiving a benefit greater than the divorced spouse’s benefit.
You can file for spousal benefits even if your ex isn’t receiving his or her own benefits - so long as your divorce has been final for two years. Eligibility for an ex’s benefit is lost if you remarry, and you can’t file for benefits on your new spouse’s earning record until you’ve been married to that person at least one year.
Filing for a divorced spouse benefit is a completely private affair between you and the Social Security Administration. The Social Security Administration doesn’t report to your spouse that you’ve inquired - or filed for benefits - on his or her record.
You’ll need to prove you were once married by visiting your local Social Security office with paperwork in hand. Be prepared to show a birth certificate; proof of citizenship; W-2 forms or self-employment tax returns for the last year; your final divorce decree; and your marriage certificate.
The story of Brewton’s client illustrates the most simple example of how can the divorce rules help boost benefits. Here are two hypothetical examples of ways the rules can benefit a divorced spouse, provided by SocialSecuritySolutions.com; all the amounts are shown in today’s dollars without cost of living adjustments.
Vicky divorced at age 58, and is projected to have a monthly Social Security benefit of $1,094 at full retirement age. Her ex-husband’s full retirement benefit is $2,410. At age 66, Vicky can claim a spousal benefit of $1,205 each month until age 70. When she reaches age 70, Vicky’s own benefit will have grown to about $1,444 through delayed filing; at that point she can switch to her own higher benefit. Assuming Vicky lives to age 90, the cumulative lifetime difference between starting her own benefit at age 66 and this strategy is $89,328.
(This strategy won’t work if Vicky filed for the spousal benefit before her own retirement age; in that situation, she wouldn’t be able to choose which benefit to collect; she’d automatically receive whatever benefit is higher at that point - which is her own.)
Diane was married to Phil for 15 years and to Jim for 21 years. Phil was the higher earner, with a full retirement benefit of $2,442. Jim’s full retirement benefit was $2,136. Diane’s own full retirement benefit was only $963.
Diane began by collecting half of Phil’s benefits at age 66 - $1,221. Her plan was to switch to her own benefit at age 70 when it would have grown to $1,271.
But before she reached age 70, Jim passed away. He had waited until age 70 to begin his own benefits, meaning they had grown to $2,819. Diane was eligible to collect the surviving divorced spouse benefit of $2,819 - an increase in monthly benefits of $1,598 over what she was collecting on Phil’s earnings record. That is a lifetime difference of more than $383,000, if she lives to be 90.
“You can switch back and forth with multiple ex-spouses,” says Jim Blankenship, a financial planner who specializes in Social Security benefits. “It’s sort of the Elizabeth Taylor scenario.”
The Hollywood star actually stayed married to just one of her seven husbands long enough to meet Social Security’s ten-year rule - Richard Burton. Their 1964 marriage did last more than ten years - and they tied the knot a second time for about 9 months in 1975.
Both of those marriages could have been added together under the Social Security rules.
(The writer is a Reuters columnist. The opinions expressed are his own.)