Can an Ex Collect from His Older Ex-Wife When She Hits 66?
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Larry Kotlikoff’s Social Security original 34 “secrets”, his additional secrets, his Social Security “mistakes” and his Social Security gotchas have prompted so many of you to write in that we now feature “Ask Larry” every Monday. We are determined to continue it until the queries stop or we run through the particular problems of all 78 million Baby Boomers, whichever comes first. Kotlikoff’s state-of-the-art retirement software is available here, for free, in its “basic” version
Loretta: I was married for 25-plus years. My ex makes a ton of money and is still working at 72. I receive a little more than $1,000 per month with no retirement. He will be getting the maximum Social Security. Will I receive more Social Security when he retires?
Larry Kotlikoff: If you told the Social Security Administration that you are divorced, you should be getting the sum of your own retirement benefit plus a spousal benefit based on your ex’s account. I would check to make sure they know you are divorced. As long as he’s over 62, which he is, you can collect a spousal benefit (starting as early as 62) regardless of whether he does or doesn’t start to collect his own retirement benefit.
Jorge Villar: I am 64, retired from the federal government and missing six quarters to qualify for Social Security. Can I use my ex-wife’s work to meet requirement?
Larry Kotlikoff: No, you have to have 40 quarters on your own account to receive retirement benefits. So go to work for someone for a low wage, if need be, to get the extra six quarters. But you can receive a spousal benefit based on your wife’s earnings record.
Martin Weiss: I recently divorced after 25 years of marriage. My ex-wife is seven years older than me. She is currently 65. I am going to be 58. At age 62, may I receive her Social Security benefit? Is it advisable to do so?
Larry Kotlikoff: You can start collecting reduced spousal benefits at 62. But you will also be forced to take your retirement benefit early. A better strategy may be to a) wait until you reach full retirement age — 66 in your case — and take just your spousal benefit and then b) wait until 70 to take your own retirement benefit, when it will be as much as 76 percent higher than if you take it at 62.
The problem with your approach is that the spousal benefit you’ll receive starting at 66 will be half of your ex’s full retirement benefit (not necessarily half of what she actually collects as a retirement benefit, since she may take her retirement benefit early or late). If you take your spousal benefit before full retirement age — even a month before — it will be calculated at a lower rate for your entire life. It won’t be half of her full retirement benefit but instead what’s called your “excess spousal benefit” and be calculated as half of her full retirement benefit less your full retirement benefit. This amount could, in your case, be zero or even negative (in which case they set the excess spousal benefit to zero). Our software, which costs $40, can help you see the trade-offs her and precisely what you’ll get under different scenarios.
Carol Moore: My husband passed away in June of 2010 and the person at the Social Security office tells me I can’t get any of his benefits because I make too much money. She told me to quit my job in order to collect them.
Larry Kotlikoff: Don’t quit your job. Jobs are hard to come by these days. Work as long as you can. Once you reach full retirement age, which is currently 66, the earnings test goes away. At that point you can start collecting just your survivor benefit and postpone collecting your own retirement benefit until age 70. This may be the best strategy. There is a huge reward for waiting unless you are absolutely sure you will die at a young age.
Jane Stewart: I was married for 31 years to a now retired man. He remarried and had a child at 55. He now collects more per month for her than I collect from his work years. Doesn’t seem right. Is it?
Larry Kotlikoff: Social Security rules can be inequitable and capricious, not to mention ridiculously complex. The more I learn about the details of the system, the more I believe in my own alternative, spelled out at The Purple Social Security Plan. You are free to endorse it if you’d like.
Diane M. Smith: I was married for 15 years (1966-1981) and have never remarried. I’m told I can claim benefits on my ex’s Social Security. I am 65 and will reach full retirement age in April 2013.
Larry Kotlikoff: This is true. But if you haven’t taken your own retirement benefit up until now, consider waiting until 70 to do this. At 66, when you’ll reach full retirement age, you should apply for your spousal benefit and you’ll get half of your ex’s full retirement benefit. Even if you have already taken your own retirement benefit, you should still wait until 66 to apply for a spousal benefit. That way, it won’t be permanently reduced. But a warning: what you’ll get will be less than half of his full retirement benefit. It will equal a) half of his full retirement benefit less b) your full retirement benefit. This “excess spousal benefit” will be zero if your own full retirement benefit exceeds half of his.
Judy: I was born in 1951. At what age can I start taking Social Security benefits? I am still working full time. My husband is 70 and receiving Social Security benefits and is working full time. Am I eligible for spousal benefits as well?
Larry Kotlikoff: You can start receiving retirement benefits at age 62. Be forewarned: there is an “earnings test.” If you earn more than $14,640 this year, your benefits will be reduced, potentially to zero. But — any reduction in benefits will be recorded and used to raise your benefits after full retirement. So the earnings test is not really something to worry about. If you haven’t reached full retirement age, however, think twice (or many times) before taking benefits early. You’ll be forced to take both your spousal and your retirement benefits early and both will be permanently reduced. Our software, which costs $40, can tell you what strategy will get you the highest lifetime benefits.
Lawrence: I am a widower who was and is a stay-at-home dad. I have been dependent on my wife’s income since our first and only child was born. This was the best and only way we had to care for our child. My wife was the bread winner of the family. My wife passed away six years ago of cancer at age 50. I was 51 and our child was 10. I and my child got survivors’ benefits through the last six years. When my child turned 16 last year, my benefit was stopped. My child still gets the benefit until finishing high school, as you know. My question is: Am I still eligible for benefits since I was dependent on my wife’s income? The Social Security Administration did not let me know if I was since they weren’t aware of my dependency from 1995 to the present.
Larry Kotlikoff: You will be eligible for a survivor benefit when you reach 60, but you should consider waiting to full retirement age to collect it because it will then be about 30 percent higher each year for the rest of your life. Very sorry for your loss.
Deborah: I am a second wife with a third after me. As far as Social Security goes from my ex, who among us has a claim? Of the three wives, I was married the longest at 14 years. Just wondering.
Larry Kotlikoff: All three ex wives can collect spousal and survivor benefits provided they were married ten years and 1 second prior to getting divorced. So, yes, you can collect benefits — spousal, while your ex is still kicking — and survivor benefits after he dies.
This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions.