By Karen DeMasters
Just because you are divorced does not mean you cannot collect Social Security benefits from your ex-spouse.
Under many circumstances, the divorcee can collect part of the spouse's benefits, as long as the person collecting does not remarry.
Any benefits that are not directly your own are known as derivative benefits. Kimberly Foss, CFP, president of Empyrion Wealth Management in Roseville, Calif., is intimately familiar with these types of benefits. Many of her clients are divorced women and many are entitled to benefits through their ex-husbands.
"I recently had a client who had been married for 35 years and got divorced. Her ex-husband was eligible for Social Security but was not collecting yet and she was working part time," Foss says.
"We had to go to Social Security three times before they agreed she was eligible for benefits even though her husband was not collecting yet," she says. "The rules are very complicated and you have to be ready to prove your case."
As Foss showed in this case, an ex-spouse is entitled to Social Security benefits if the spouse being divorced is eligible for benefits, whether or not he or she is collecting at the time of the divorce. The marriage must have lasted 10 years and the collecting spouse must be old enough to be eligible for benefits.
An ex-spouse is eligible for benefits when she or he reaches 62 years old, Social Security's early retirement age. The individual would receive about half of an ex-spouse's benefits. But since the individual is not at full retirement age, Social Security benefits would be reduced depending on how much the individual is earning.
The Social Security Administration allows a person who is between 62 and full retirement age to make $14,640 a year. For any amount over that, $1 in Social Security benefits is deducted for each $2 earned. People must decide if they will end up with enough money after the deductions to make it worth collecting early. At full retirement age, Social Security is not reduced, no matter what one earns.
The amount she will receive is based on the husband's earnings credits. If she remarries, she generally cannot collect benefits on the ex-spouse's record unless her later marriage ends, whether by death, divorce or annulment.
If the ex-spouse dies, the ex-wife can still collect survivor benefits if the marriage lasted 10 years. Again, a penalty is taken if the collecting spouse is not of full retirement age and she is working. At full retirement age, the ex-spouse can collect 100% of the deceased spouse's benefit if she does not remarry. The ex-spouse could collect survival benefits while her benefits accrue to the maximum amount when she is 70 and then she could start collecting her own benefits instead, if they are higher than the survival benefits.
Any number of ex-wives can collect on the husband's benefits, as long as they were married for 10 years or more. If the wife is raising the ex-husband's child and the child is under the age of 16, the child also can collect a small benefit.
Many public employers do not pay into the Social Security system, but a retired public employee can still receive Social Security spousal benefits even if she is collecting a public employee pension.
The divorced spousal benefits were originally designed on the assumption that divorced women would have a hard time financially, according to the Social Security Administration.
Although benefits are now equal regardless of whether it is an ex-wife or ex-husband who is collecting, women, many of whom are divorced or widowed, are still more likely to suffer from poverty in old age, Foss says.
Women still earn 77% of what men earn so their Social Security benefits are not as great and they are more likely to be out of the work force to raise children during their peak earning years, further reducing their credits for benefits.
"Eighty-seven percent of women over the age of 80 will be poverty stricken," says Foss, so any benefits they can collect through an ex-spouse can be helpful.
Foss recommends a divorced person find a CFP who has taken part in continuing education programs and knows the ins and outs of Social Security to help in taking advantage of the full range of Social Security benefits. Additional information is available at the Social Security website under "If You Are Divorced."