Q: My husband and I are divorcing. He is 66, and plans to delay starting Social Security benefits until he turns 70. I turn 64 this month and I’m still employed as an administrative assistant. What are my options for Social Security benefits?
A: You may have a number of options. You may qualify for:
- Your own retirement benefit.
- A divorced spouse benefit based on your ex-husband’s account.
- An option that can help you maximize your own retirement benefit if you are willing to delay starting any Social Security benefit until after reaching your full retirement age (66). This option is still available to you because you were born before January 2, 1954. Although it is no longer available to divorced spouses born after that date.
If you are divorced, and have only a very low (or even no) retirement benefit based on your own earnings, you can receive a Social Security spousal benefit based on the account of your ex-spouse, even if your ex has remarried or has not started Social Security. To qualify, you must meet the following requirements:
- You are unmarried;
- You are age 62 or older;
- Your ex-spouse is entitled to Social Security retirement or disability benefits; and
- The benefit you are entitled to receive based on your own work is less than the benefit you would receive based on your ex-spouse’s work.
While you can file for benefits at your age, your check will be permanently reduced for starting benefits before your full retirement age (66). If you wait until your full retirement age you would get a divorced spouse benefit that is one half of your ex-spouse’s full retirement amount. If your ex continues to work, his benefit is probably going up and so waiting to file will give you a higher future benefit as well.
If you have a substantial number of years of your earnings, and are entitled to a retirement benefit based on your own work record, it would still be a good idea to put off filing for benefits until you reach 66 in order to claim the full un-reduced amount. In addition, if you claim before age 66 and continue to work, Social Security earnings restrictions rules will reduce the amount of benefits you receive, often to zero. If you wait until you reach your full retirement age, you can claim un-reduced benefits and continue to work and earn as much as you want without getting docked for earning more than Social Security’s annual earnings restriction, which is $16,920 per year or $1,410 per month in 2017.
If you can delay starting your retirement benefit and continue to work past the age of 66, your retirement benefit will grow by 8 percent per year until age 70 due to delayed retirement credits. While many aspire to this plan, it can be hard to achieve for many divorced women.
However, because you were born prior to January 2, 1954, you are still able to take advantage of a provision that can help you maximize your own Social Security benefit. At your full retirement age, you could claim a divorced spouse benefit at your full retirement age, while you delay starting your own retirement benefit, to allow it to grow up to age 70.
This decision is one of the most important financial decisions you will ever make and it pays to get it right. It will be important for you to get estimates of the benefit you can expect from each option, based on starting at different ages, and you may want to talk to one or more retirement benefit counselors, in addition to one or more service representatives at the Social Security Administration.
Here are two excellent books that may help: How to Make Your Money Last, The Indispensable Retirement Guide, Jane Bryant Quinn, 2016, and Get What’s Yours, The Revised Secrets To Maxing Out Your Social Security, Laurence J. Kotlikoff, Philip Moeller, and Paul Solman, 2016.