Aubrey Connatser and Guy Rodgers, Texas Lawyer
Dramatic increases in the number of older people getting divorced these days have brought to light social security rules that provide additional benefits to divorced people who qualify.
These “gray” or Baby Boomer divorces are more common than ever before. A study from the National Center for Family and Marriage found that the U.S. divorce rate for couples age 50 and older doubled between 1990 and 2010, and was even higher for those over 65.
The main concern of most people who divorce late in life is whether they will have enough money to live comfortably the rest of their lives. Divorce can drain the coffers of people in their 60s and 70s who may not have a way to rebuild their finances afterward. These older people need a pathway to security, and social security can be an important part of finding that pathway.
Social security benefits are based on how long a person has worked, how much money is earned and when the person starts taking benefits. Social security retirement benefits can start at age 62. Full retirement age of people born between 1943 and 1954 is 66 years of age, while benefits max out at age 70.
People who may not have worked for wages (such as housewives), worked for low wages or in jobs where social security taxes were not taken out through payroll deduction, may not qualify to receive much of a benefit. Eligibility for certain benefits can also depend on marital status. For divorced, divorcing and married people alike, the key is knowing the most advanced strategies and aggressively pursuing benefits.
Claimants must file to determine their benefits, even if they question their eligibility. The Social Security Administration will not come after people waving money.
Those who might not otherwise qualify for benefits may be eligible for divorced spousal benefits. A divorced spouse can collect social security retirement benefits based on the work record of an ex- husband or wife under strict conditions. For purposes of this explanation, the spouse filing on the benefits of an ex will be called the filing spouse. The spouse who earned the benefits being filed on will be called the earning spouse.
The rules for collecting divorced spousal benefits are as follows:
Both the filing spouse and the earning spouse must be at least 62 years of age.
The couple must have been married for at least 10 years and divorced for two years.
The filing spouse must be unmarried at the time of filing. The marital status of the earning spouse is not a factor.
The filing spouse cannot be eligible for a higher benefit based on his or her own work record.
For the filing spouse to collect, the earning spouse must be entitled to receive benefits but doesn’t have to be receiving them at the time of filing.
No one has to ask an ex’s permission to file and there doesn’t have to be any contact between the exes during this process. Even if the earning spouse is remarried, this filing won’t affect the right to divorcee benefits, nor will it affect his or her retirement benefits or that of a current spouse. Only if the filing spouse remarries will he or she become ineligible for these benefits.
Syndicated columnist Tom Margenau recently told the story of a divorced couple, both age 66, who filed on each other’s benefits. For four years, each of them received 50 percent of their ex’s full social security benefit, and it was perfectly legal. This kept their own benefits intact until age 70, when they switched to their own full benefit plus the 32 percent bonus that goes with delaying retirement benefits until 70. This strategy is applicable only to people born before 1954.
Note that if a person qualifies for more than one set of benefits, in most cases he or she will collect on only the larger one.
A variation on the divorced spousal benefit is the divorced survivor benefit. If an earning spouse dies, after being married for at least 10 years and divorced for at least two years, the filing spouse can collect up to 100 percent of the amount the deceased was to receive. These benefits are available to divorced spouses as early as 60 years of age, or 50 if the survivor is disabled.
With the increase in divorce among older people, and with people living longer, these benefits have become more important for supplementing the money available to people coming out of a divorce.
Social Security is an important part of retirement income, but it isn’t intended to provide for everything. It should be just one piece of a person’s overall retirement strategy. Family law attorneys should explain these benefits to their divorcing clients or team up with a qualified planner with more experience interpreting the arcane rules of social security.
Aubrey Connatser is a Board Certified Dallas family lawyer who can be reached at aubrey@connatserfamilylaw.com. Guy Rodgers is a Mansfield financial adviser and Board Certified family lawyer at guy@grpws.com. For more information on social security benefits, visit www.ssa.gov.