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Social Security: Your Divorce’s Upside?

Divorce is messy. Divorce and money is messier. There is one financial benefit you may qualify for, though, that won’t send your ex-spouse into a rage – social security (SS).

Here are the basics:

You are eligible to receive social security benefits based on your ex-spouse’s work record if you were married for 10 or more years AND all the following conditions apply:

  1. You are unmarried;
  2. You are age 62 or older;
  3. Your ex-spouse is entitled to Social Security retirement or disability benefits; and
  4. The benefit you are entitled to receive based on your own work is less than the benefit you would receive based on your ex-spouse’s work (Source: Social Security Administration)

What kind of benefits are we talking about? 

  • Your benefit is 50% of your spouse’s full SS retirement amount, if you are at your full retirement age.
  • Even if your ex- hasn’t started receiving SS, as long as he qualifies for SS benefits, you can receive the benefit on his record as long as you’ve been divorced for two years.
  • If you are eligible to receive your own SS retirement benefits and your spouse’s, the IRS will pay your benefit first. If the benefit on your ex-spouse’s record is higher than yours, you will get an additional amount.

But that’s not all…

In 2015, the Bipartisan Budget Act changed the SS benefit law so that people born on or before January 1, 1954 can file what’s called a “restricted claim” for those spousal benefits at age 66. That means if you are divorced, at your full retirement age, and meet the above criteria for eligibility, you could elect to get only your ex-spouse’s benefit and let your own SS benefit grow at 8%/year until you are 70.

However, those born on or after January 2, 1954 do not have that same option. When you apply for the SS benefit, you are essentially saying “give me all the benefits available,” and the SS Administration will compare your benefit to your spousal benefit and give you the higher of the two.

It’s complicated, so get help

As always, if you continue to work while receiving SS benefits, retirement benefit earnings limits still apply and your benefits could be reduced. Certain pensions can also affect how much of your ex-spouse’s benefit you will receive. As you can imagine, claiming your social security benefits can be very complicated. Your claiming strategy can make a huge difference in your retirement income planning. Whether you were born before or after January 1, 1954, it is essential for you to get sound advice from your CPA or other financial professional about the timing of applying for these benefits. Our team at Team Holly CPA is here to help. Contact us today for a free consultation.

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