If you are divorced but were married to your spouse for ten or more years you are potentially eligible for spousal benefits through Social Security. However, there is more to this eligibility than merely applying for benefits and receiving them without any issue.
Today’s blog post from the Law Office of Bryan Fagan will walk you through your options and hopefully provide you with some knowledge as to how you can best proceed in your particular situation.
Spousal benefits explained
The spousal benefits that the Social Security Administration Offers are equal to one-half of your ex-spouse’s benefits as a retired worker. If the amount of this benefit is greater than your own benefits you are eligible to receive in Social Security benefits then you would want to take advantage of your ex-spouse’s benefits rather than your own.
A key point to understand, however, is that later on, you have the ability to convert this spousal benefit to your own benefits as a retired worker. The same rules apply here for both current spouses and ex-spouses.
Divorce and Social Security Benefits
As we noted at the outset of today’s blog, if you are divorced you must have been married to your spouse for at least ten years to be eligible for spousal benefits. If you are currently married then you would not be eligible, however.
The spousal benefits you intend to claim through your ex-spouse can be claimed once your divorce has been finalized for two years. It does not matter if your ex-spouse has claimed their benefit or not but he or she must be eligible to claim the benefit.
Restricted application for Social Security Benefits
If you qualify to take advantage of the spousal benefits, you will want to file a restricted application for benefits once you reach your full retirement age. By doing so you are able to collect your spousal benefit while simultaneously allowing your own benefits to grow 8% per year until you turn 70 years old.
At that point, the conversion that we discussed above can occur- your spousal benefit would then convert to your own retired worker’s benefit.
The impact of filing early for Social Security Benefits
It is fairly well known that you have the ability to apply for Social Security Benefits early, beginning at age 62, or when your benefits become fully vested at age 67. The decision you make has impacts on your life and I would like to share those with you in this section.
First of all, Social Security will only pay you based on your eligibility in terms of your spousal benefit and retired worker’s benefit. This amount plus any cost of living adjustments will be your full, permanent benefit.
A restricted application for a divorced person like yourself can potentially play out in the following way. Suppose that you and your spouse were married for 19 years before getting a divorce.
You never got remarried and returned to the workplace after your divorce. You find yourself at age 63 being in a position where you are considering retirement. Your “full” retirement age for Social Security is 67. Your benefits could be something like $1,200 per month once you reach this age. Meanwhile, your spouse’s benefits at the same age would $2,200. For the sake of this example, assume that you and your spouse are the same age.
If you decide to file for Social Security benefits at age 63 then Social Security will pay you the higher of either your spousal benefits or your own retired-worker benefits. In this example since your own benefit would be higher than your spousal benefit ($1,200 vs. $1,100), you would receive only your retired-worker benefit. Your benefit amount would then be permanently reduced to something like $1,050 per month (plus the cost of living adjustments) given that you are not at your “full” retirement age.
However, if you decide to wait until you reach the full retirement age of 67 then you could file a restricted spousal benefit of $1,100 per month. In doing so, you allow your own retired worker benefit to grow at the eight percent rate that we have previously discussed. Once you reach the magic age of 70 you would then be able to convert your own retired worker benefit into a combination of that benefit and your spousal benefit. The growth would mean your benefits now equal something closer to $1,550 per month.
What to do if you want or need to retire earlier than 67?
You may be in a position where you want or need to retire earlier than 67. If you want to retire early then you can always live off your IRA or 401(k) for a few years until you reach age 67.
Some folks in your hypothetical position choose to purchase low-risk financial assets like an annuity during this time period. An annuity is an insurance policy that pays the policyholder a guaranteed monthly income. Another option would be to work in a part-time position during the interim years between retirement and age 67. Doing so would allow your retirement benefits and Social Security benefits to grow at the same time.
If you and your spouse are divorced you are also eligible to receive survivor benefits from Social Security. If your ex-spouse passes away before you do your benefits on a monthly basis would be replaced by their retired-worker benefit if their amount were higher than your benefit.
Don’t just trust us- do the math to figure out what is best for you and your financial future
No matter what source you go to for information regarding your retirement, financial or legal options it is crucial that you understand your options. We all know that feeling when we go to a business and the salesperson, accountant, or attorney talks at us rather than to us. Their speech on a given subject has been given so frequently that he or she gets on auto-pilot.
Meanwhile, none of what they have to say sinks in and we gain no knowledge from the interaction. This is a bad way for you to make decisions that can have far-reaching implications on your life and those of your family members.
I recommend working with people, attorneys specifically, that have the heart of a teacher rather than the heart of a salesperson. Teachers worry more about your understanding and feeling comfortable with a subject than they do with making a dollar.
With that said, make sure that you understand how you can best align your interests with your potential Social Security benefits. Your spousal and survivor benefits are available to you no matter if your ex-spouse has gotten married again after your divorce. As we’ve mentioned in today’s blog post a restricted application may be your best option for increasing not only your own monthly retirement income but also your peace of mind.
Questions on Social Security benefits and your divorce? Contact the Law Office of Bryan Fagan
If you are in your “golden years” and are going through a divorce an aspect of your case that you should not overlook are Social Security benefits. If you have questions over anything that we’ve discussed today please do not hesitate to contact the Law Office of Bryan Fagan today. Our licensed family law attorneys are experienced in handling divorce cases of all sizes for clients across southeast Texas. A free of charge consultation at our office is available six days a week.
We pride ourselves on being strong advocators for our clients but also in teaching and explaining the steps of a divorce or family law case so that our clients understand the relevant issues and are better equipped to make good decisions for themselves and their families.
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Law Office of Bryan Fagan | Houston, Texas Divorce Lawyers
The Law Office of Bryan Fagan routinely handles matters that affect children and families. If you have questions regarding divorce, it's important to speak with one of our Houston, TX Divorce Lawyers right away to protect your rights.
Our divorce lawyers in Houston TX are skilled at listening to your goals during this trying process and developing a strategy to meet those goals. Contact Law Office of Bryan Fagan by calling (281) 810-9760 or submit your contact information in our online form. The Law Office of Bryan Fagan handles Divorce cases in Houston, Texas, Cypress, Klein, Humble, Kingwood, Tomball, The Woodlands, Houston, the FM 1960 area, or surrounding areas, including Harris County, Montgomery County, Liberty County, Chambers County, Galveston County, Brazoria County, Fort Bend County and Waller County.