Even if you’ve been divorced for years, you may still benefit from a divorcée spousal benefit from your ex’s work record. Social Security expert Larry Kotlikoff explains when and how to cross that path. Photo courtesy of Flickr user Luis Vest. _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
Liz — Dallas, Texas: I’m 62 and still working. I was divorced at 45 after 26 years of marriage. How do I determine if I’m better off filing under my ex’s Social Security or my own?
Larry Kotlikoff: Your ex has to be over 62 before you can file to receive a divorcée benefit. If your ex is deceased, you can file to receive a survivor benefit on his record, provided you didn’t remarry before age 60.
I’ll assume your ex is over 62. Here’s the rub. If you file before full retirement age for a retirement benefit, you’ll be deemed to be filing for a divorcée spousal benefit. And if you file for a divorcée spousal benefit before full retirement age, you’ll be deemed to be applying for a retirement benefit. In other words, Social Security deems you to be filing for both when you file for one before full retirement age.
And once you have filed or have been deemed to have filed for a retirement benefit, your spousal benefit becomes your excess spousal benefit. This may be calculated as zero, as described in many other columns (see the answer to Jeff in last week’s column). If it’s not zero, it may be very small. Plus, taking it before full retirement age will lead it to be reduced. Your retirement benefit will also be reduced because you are taking it or being forced to take it early.
So, let’s not have you file now. Instead, how about you wait until full retirement age — 66 in your case — and apply just for your spousal benefit and wait until 70 to apply for your retirement benefit. Your spousal benefit under this strategy will be your full spousal benefit, equal to half of your ex’s full retirement benefit.
If you were desperate for income, I’d temper my suggestion. But you say you are still working. Paul is past your age. He’s still working and doing a damn fine job of it. Neither he nor I think anyone should stop working if they like their jobs and are up to it physically. Life can be too long to retire!
Janet B. — Hemet, Calif.: I’ve been trying to figure out when or if I should take benefits based on my ex-husband’s account. He is nine years older than I am, and we were married for 30 years. I have worked my whole life.
Larry Kotlikoff: If you play your cards right you can do both. The trick is to wait until full retirement age, apply just for your divorcée spousal benefit, and then at 70 apply for your own retirement benefit. If you have a pretty high maximum age of life, waiting to collect your retirement benefit will provide you higher lifetime benefits because Social Security strongly rewards waiting, up to a point, to collect benefits. But you can’t engage in this strategy if you apply for either a spousal or retirement benefit before full retirement age (see the answer to Liz’s question above).
Helen — Eureka, Calif.: I am twice divorced and began taking my own Social Security benefit at age 66. My first husband died last year. We were married over 10 years. Am I eligible to collect his Social Security benefit?
Larry Kotlikoff: You may or may not receive a higher benefit from your ex’s work record. But yes, you are eligible to collect on it. You’ll receive the larger of either your survivor or retirement benefit. If you are under 70, you can suspend your own retirement benefit until age 70 and just take, between now and age 70, your excess survivor benefit, which will equal the difference between your survivor benefit and your own retirement benefit inclusive of any delayed retirement credits you get from having waited to collect. And then at 70, you could restart your retirement benefit at a higher value thanks to the application of the delayed retirement credits. But check with the Social Security Administration to see if collecting on your ex’s record would result in a higher benefit.
Brian Ivey — Lakewood, Wash.: I was married to a woman from Korea for 10 years. In that time she became a U.S. citizen and worked for several years. We divorced and she returned to Korea to live in 1988. I have never re-married. My question is, can I collect a portion of the Social Security benefits she earned while working in the United States?
Larry Kotlikoff: Yes, from what I understand you can collect divorcée spousal benefits and, if she dies before you, survivor benefits based on her earnings record. But this presupposes she is eligible to collect a retirement benefit. For this, she needs 40 quarters of covered employment. Also, you must both be at least age 62 for either of you to collect spousal benefits on the other’s work record.
Mike — Hawthorne: I’ve been retired (industrial disability) since 2001 and have been collecting my pension since. I was told that I should collect Social Security as well. What are my option?
Larry Kotlikoff: If you are able to qualify for Social Security disability benefits, do so. You’ll collect them through full retirement age and then automatically convert to your full retirement benefit unless you follow the strategy outlined in this article.
Jane — Grand Rapids, Mich.: My husband passed away at age 62 and I am 58. I can collect survivor benefits at age 60. Will this reduce the amount of retirement benefits I receive? Or do I keep receiving survivor benefits instead?
Larry Kotlikoff: Unlike taking spousal benefits early, which forces you to take your retirement benefit early, taking your survivor benefit early (and age 60 is the earliest you can do that), doesn’t force you to take your own retirement benefit at the same time. You can, for example, take reduced survivor benefits starting at 60, and at 70 apply for your own retirement benefit. At that point, your Social Security check (apart from deductions for Medicare Part B premiums) will equal the larger of either your own retirement benefit or your survivor benefit. Your retirement benefit will be 76 percent higher after inflation than were you to start it at age 62.
But this may not be your best strategy. It may be better to take your reduced retirement benefit at 62 and take your unreduced survivor benefit at 66. Software can tell you what’s best.
This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions