Maximizing Your Social Security Benefits: Part 2

Maximizing Your Social Security Benefits: Part 2

Divorced Singles

Who can use it? People who were married to a former spouse for 10 years or longer, making them eligible to receive benefits on the work record of their former spouse, but who have NOT remarried.

At what age can you take advantage? If you are at least 62, you can take advantage of this strategy, but ideally you would be at full retirement age.

How Does it Work? If you were married to a former spouse for at least 10 years, you are eligible to receive benefits on their work record, regardless of your ex-spouse’s claiming status (whether or not he/she is receiving benefits) or marital status (whether he/she has remarried and is still married or divorced from that spouse). Although you can still file for benefits if your ex-spouse hasn’t applied for benefits, you must wait 2 years after the divorce before you can claim as an ex-spouse. If your ex-spouse is already receiving benefits, on the other hand, the 2-year wait does not apply.

The difference between this strategy and the strategies available for married couples is that divorced singles do not need to wait for their former spouse to claim; however, the former spouse must be eligible for benefits even if they have not claimed yet.

Example: George and Jane are both age 66 and are both professors. George enjoys teaching and would like to continue doing it for a few more years. On the other hand, Jane is ready to retire. If they each filed for benefits at 66, George would receive a benefit of $2,000 per month while Jane would receive a benefit of $2,200 per month. They both know, however, that they can maximize their benefits by combining the “File and Suspend” and “Claim Now, Claim More Later” strategies. Since George is at full retirement age, he files for benefits and then immediately suspends them allowing his own retirement benefits to accrue delayed retirement credits. This allows Jane, who is also at full retirement age, to file for a spouse-only benefit allowing her own retirement benefit to grow also. Since she is at the full retirement age, Jane receives an un-reduced spousal benefit of $1,000 per month. When each turn age 70, they then will file for their own retirement benefits, which have grown because they waited. At age 70, George receives a retirement benefit of $2,640 per month and Jane switches from receiving a spouse benefit to the higher retirement benefit of $2,904 per month.

Example: David and Susan, who are both 62, divorced after 15 years of marriage, at age 58. David always earned much more than Susan. He remarried, she didn’t. Susan needs income now. She thought she was stuck with her monthly benefit, reduced for life because she must take it early. However, Susan has a choice. She can apply as an ex-spouse of David’s because their marriage lasted longer than 10 years and because she is not currently married. She can file for half of his benefit—again reduced because she is taking the benefit earlier than full retirement age—even if he has not yet claimed his own benefit. Susan will get whichever amount is larger—her own reduced benefit or the reduced spouse benefit based on David’s earnings. Since David always made much more than she did, the reduced spouse benefit might be larger. It’s important to note that if she was able to wait until age 66 to claim, she could claim half of David’s benefit and allow her own benefit to grow until age 70 (this is the “Claim Now, Claim More Later” strategy discussed earlier).

Your To-Do List:

 Gather documents, including your Social Security card, marriage certificate and divorce decree (if applicable).

 Contact the Social Security Administration at 1-800-772-1213 to determine how much in benefits you are eligible for on your own record and on your spouse’s (or ex-spouse’s) record.

 Calculate how much you’ll get by claiming based on your ex-spouse’s work record
and delaying collecting your own. AARP’s Social Security Benefits Calculator can help you look at the numbers: www.aarp.org/ socialsecuritybenefits. Learn about reverse mortgages. AARP has extensive information about these loans, at www.aarp.org/revmort.

 Create a plan to reach your retirement goals, whether it means learning new skills to stay employed longer, saving more money for retirement or possibly downsizing. AARP’s Ready for Retirement? Tools to Achieve Peace of MindSM can help you get started: www.aarp.org/readyforretirement.

 Once you to decide to claim, contact the Social Security Administration at 1-800-772-1213 or www.ssa.gov.

Source: AARP