By Marcia Mantell
It's a surprise to many divorced people that they are eligible to claim "ex-spouse" benefits on the work record of their ex, but only when certain rules are met. Effectively, if you and your ex were married long enough to set up a financial household together, you are eligible to claim off his record as long as it would give you a higher dollar amount.
First, the rules for ex-spouses:
The two of you had to have been married for 10 consecutive years or longer. Not 9 years and 10 months. Not six years the first time, and seven years the next try. The one exception is if you get a divorce, decide it was a mistake and remarry within 12 months of the divorce.
You each have to be at least age 62. So, if you are the older ex, you must wait until your younger ex-spouse also reaches 62. That's because each person must be eligible for Social Security retirement benefits before one can claim on the other.
Your divorce had to be finalized at least two years ago, or your ex is already claiming benefits.
You have not remarried. If you have remarried, you are once again a spouse and may be eligible for spousal benefits on your current husband or wife.
Next, how much can you get on your ex-spouse's Social Security record?
The general rule is that when you reach your Full Retirement Age (for most people, their Full Retirement Age is between 66 and 67), and assuming you meet all other rules above, you are entitled to 50% of your ex-spouse's primary insurance amount or PIA. If you claim earlier than your full retirement age (FRA), you'll get less.
But is there a catch? Well, yes. You can only claim on your ex's record if your own benefit amount is less than half of your ex-spouse's. For example, if your own PIA is say, $1,200 per month, and 50% of your ex-spouse's PIA is $1,000 per month, you'll only get the benefit on your own work record. On the other hand, if your PIA is $750 per month, and 50% of your ex's is $1,000 per month, you'll get $1,000. You're only entitled to one benefit payment and it will always be the highest one for which you are eligible.
What about the higher-earning ex-spouse?
There is often concern that the higher-earning ex-spouse has to give up some of his Social Security benefit to pay the lower-earner's benefit. That's not so.
Keep in mind that Social Security is simply a series of calculations. There is nothing personal here. If you meet the rules to claim on your ex, and you would get a higher benefit than on your own record, you get benefit based on your ex's work history. Your ex's benefit is not reduced at all. He or she gets his or her full calculated benefit. It will also be based on their work history. Multiple people can receive a benefit based on one person's work record. The higher earner's benefits are not reduced.
And, if you are the higher earner and have two or three ex-spouses? In this case, so long as you were married to each ex-spouse for 10 years or longer, and meet the other eligibility rules, each ex-spouse will be eligible to receive a benefit based on the higher-earning ex-spouse's record. Again, there is no impact to the higher-earner. If his PIA is $2,600 per month, and he claims at his FRA, he'll get $2,600. Each ex who meets all of the ex-spouse rules will receive $1,300 per month (half of his) at her FRA, so long as this is the largest benefit each is eligible for.
The new tax law has catapulted divorce and alimony payments into the land of even greater confusion. There are many new decisions to make and numbers to be calculated whether you are the payer or the receiver of alimony.
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But the complexity doesn't stop with the new tax law. There are many financial considerations each party must consider when splitting up a financial household. Surround yourself with the best professionals and take their advice. Learn as much as you can on your own to boost your own confidence. Remember that no question is too dumb to ask. Plus, with a team in place, starting with a top-notch divorce attorney, you'll feel better knowing that these folks have your back and will help you navigate the pitfalls that are bound to come up during this chapter of your life.
About the author: Marcia Mantell is the founder and president of Mantell Retirement Consulting, Inc., a retirement business development, marketing & communications, and training company supporting the financial services industry and its clients. She is author of "What's the Deal with®... Retirement Planning for Women" and blogs at BoomerRetirementBriefs.com.