For divorced couples, social security is one of the few areas where strategic maneuvers can make a huge difference in planning retirement income, depending on the ages of the ex-spouses. The Bipartisan Budget Act of 2015 established two sets of regulations that directly affect how ex-spouses can claim Social Security benefits after their divorce.
First, an individual can claim Social Security benefits on their ex-spouse’s earnings as if they were still married, as long as the individual is currently single and divorced, and was married for at least 10 years. The rule still applies even if that person’s ex-spouse has already remarried.
Second, an ex-spouse is “independently entitled” to claim Social Security benefits on their former spouse’s earning records, as long as the couple has been divorced for at least 2 years. The rule applies even if the ex-spouse has yet to claim benefits. Moreover, both spouses must be at least 62 years of age to be independently entitled to benefits, however. Naturally, the law has a number of nuances that need might need the input of a divorce lawyer. For example, there are certain cases where an ex-spouse can collect spousal benefits only (also known as a restricted claim), which is often worth half of the amount the ex-spouse is entitled to upon retirement. And don’t forget, they can do that while their own retirement benefit fund grows up asmuch as 8 percent until they turn 70 years old. This area is where the new rules take effect.
The new rules stipulate that only ex-spouses born on or before January 1, 1954 are able to file a restricted claim for spousal benefits when they turn 66, while allowing their retirement benefit amount to increase until they turn 70. This arrangement is unavailable to married couples, as only one spouse can file for spousal benefits.
The new rules also specifically state that younger married couples and divorced spouses do not have the option of choosing what kind of benefits to claim. Fortunately, anyone born on or after January 2, 1954 will be eligible to file for all possible Social Security benefits, whether spousal or retirement. Claimants will be paid the larger amount of the two benefits. The filing rule, however, excludes survivor benefits. This means that if a divorced spouse had yet to claim Social Security benefits and their ex-partner passed away, that person could still claim for survivor benefits and, upon reaching the age of 70, switch to their own full retirement benefits.
Alternatively, depending on the divorced person’s age at the time of their ex-spouse’s death, they may be eligible to first claim their own reduced retirement, switching to full survivor benefits upon reaching retirement.
If you are going through a divorce or family law matter, call us today at 512.215.5225 to schedule a consultation with a divorce lawyer.