Last week we discussed a question on Social Security spousal benefits that we received via email from a person who asked if it was possible to file for their own benefits at age 62 then switch to their spousal benefits at their full retirement age of 66. The answer last week was yes…and no. This week we cover a very similar question, but this time the person wanting to claim the early benefit is divorced, so how do divorced spouse benefits work in a case like this?
As we have covered in past blog posts, the basic requirements to qualify for a spousal benefit when you are divorced are:
Your marriage lasted 10 years or longer;
You are unmarried;
You are age 62 or older;
Your ex-spouse is entitled to retirement or disability benefits;
You have been divorced at least 2 years if your ex-spouse has not yet filed for benefits.
If you try to file for just your own benefit at age 62 (or any other time before reaching your full retirement age) the SS administration will look at all the benefits that would apply to you because they must pay you the highest amount for which you qualify. So if your spousal benefit is higher than your own benefit you will NOT be able to restrict your claim to just your own, allowing your spousal benefit to grow until you reach your full retirement age. This is due to rule #5 above. The SS administration does not require your ex-spouse to have filed to turn on your spousal benefit as long as you have been divorced for 2 years. This means that at age 62 you will qualify for the spousal benefit whether or not your ex has filed. This has the net effect of preventing you from deploying the strategy discussed last week where the marriage was still intact. When the marriage is still intact the spousal benefit only becomes live when the other person has FILED for their own benefit.
This is just a little nuance to the rules that actually removes a viable planning strategy as a side effect of a completely unrelated rule. The SS administration does not want your ex-spouse to be able to restrict your spousal benefit simply by refusing to file for their own benefit out of spite. Rule #5 above accomplishes this, but to the detriment of those wanting to deploy this version of the” claim now, claim more later” strategy.
Please use the play button below to listen to our audio post on this topic.