It's an all-too-common
question, with a less-than-simple answer
Asking
how Social Security benefits work with ex-spouses is opening up a real can of
worms in terms of complexity.
In this week’s
column, Phil Moeller, the author of Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your
Costs and co-author of the updated edition of How to Get What’s Yours: The Revised
Secrets to Maxing Out Your Social Security, explains how the
Social Security Administration calculates spousal benefits and the implications
of claiming it.
Got a question of
your own about Medicare or
Social Security?
Send it to askphil@considerable.com.
So what happens to my
Social Security benefits if I take my ex’s?
Question: Hello! I found your
email when I was looking online for information on Social Security benefits.
My name is Pam and I
am 59. I am divorced and was married 25 years. I was told I can collect half of
my ex-husband’s Social Security if he makes more money than me, which he does.
Am I able to collect
mine also? Or just his? And approximately how much would I collect monthly at
age 67 when I retire?
Also, I know I have
to be 62 to start collecting. Does my ex-husband have to be 62 also for me to
collect on his? Or just me?
Answer: Dear Pam, Your
questions open up the can-of-worms complexity that can spill out when someone
like you asks perfectly logical questions about Social Security benefits.
The maximum amount of
spousal benefits a person can collect – either from a current or formal spouse
– is half of that spouse’s benefit based on what he or she would have gotten
had they filed for benefits the day they reached their full retirement
age (FRA). This rule may make sense to the folks at the Social
Security Administration (SSA), but it is anything but clear to most of the
people who post questions to me.
For example, it
doesn’t mean that the spouse or ex-spouse actually did file for benefits at
their FRA, but simply that this age is used to determine the dollar basis for
spousal or ex-spousal benefits based on that person’s Social Security earnings
record.
Further, even people
who make a lot less money than their husband will never qualify for a spousal
or ex-spousal benefit. The SSA has what’s called a progressive benefits
formula, meaning that lower-income workers get a much higher percentage of
their earnings back as benefits than do people who earn more money.
This is helpful to
lower-income earners, of course, but it also means their retirement benefits
will often be higher than the maximum spousal or ex-spousal benefit they are
entitled to, even if their current or former spouse has earned much more money.
The rules also
specify that a person must wait until their own FRA to file for a spousal or
ex-spousal benefit in order to receive the maximum payout of half of their
spouse or former spouse’s FRA entitlement.
Because you were born
in 1960, your FRA is 67, meaning you have a long, long wait to get this maximum
payout. Your benefit will be sharply reduced if you file sooner.
The size of your
benefit is linked to your and your ex-husband’s earnings. You can find out your
entitlements by opening a My Social
Security account.
The size of your
benefit is linked to your and your ex-husband’s earnings.
Your husband has to
have filed for his own retirement for you to be eligible for a spousal benefit.
The rules are a bit different for ex-spousal benefits.
Even if he has not
yet filed, you can still qualify for an ex-spousal benefit if he is at least 62
and you have been divorced for at least two years.
Whenever you do file
for a benefit–either your own or an ex-spousal benefit–Social Security will
consider you at that time to have filed for both benefits and will award you a
benefit equal to the larger of the two.
By the time you work
through all of this, perhaps you will have reached your FRA! Best of luck!
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