An unmarried client of mine is ready to retire from nursing, sort of. She may work a little, in some capacity, somewhere, for a bit, or maybe not. She turns 66 in February.

“One of my co-workers says if I retire, I should file for my retirement benefits right away, but another says I should wait until 70. What do you think I should do? ” she asked.

It gave me the opportunity to explain how she can file for benefits and delay until age 70 at the same time. I know that sounds weird, but many clients can do just that if they have an ex-spouse. 

As a single person, the decision to file for retirement benefits is fairly straight forward. If she can fund the delay and expects to live into her eighties, the net “return” is terrific for a government-backed “investment” that is not subject to market risks.

She can fund a delay so normally, we would discuss her longevity expectations and the health of the Social Security system and a decision would be made.

If she opted to delay, I would probably have her file at her full retirement age (FRA) and immediately suspend the benefits.  This is a technique most often discussed in a married household, but singles can do it, too.

By filing and suspending, if she gets sick or injured or otherwise changes her mind before age 70, she can collect any suspended benefits in a lump sum and get a check monthly equal to what she would have received had she started collecting at her FRA.

However, she wasn’t always single and she has other options. She can claim a benefit off her ex-husband’s work record.

To be eligible to receive a benefit off her ex-husband’s record, the following criteria must be met:

She met all those. 

The maximum spousal benefit she could draw is available once she reaches her FRA in February. At that time, she could receive half of his primary insurance amount (PIA). His PIA is his retirement benefit at his FRA.

The relative size of their PIAs is then the issue. 

If half his PIA is substantially larger than her own retirement benefit, she could start collecting that. Spousal benefits do not earn delayed credits, so waiting to claim them does not increase her take.

If her retirement benefit is close to half his PIA, she could restrict her application to spousal benefits only. She’d get half his PIA, but her personal retirement benefit would earn delayed credits of 8 percent per year. So, if her PIA is at least 34 percent of his PIA (68 percent of half his PIA), she can switch to her own benefit no later than age 70 and get an increased check at that time.  

So far, claiming looks a lot like it would if they were still married. The restricted application technique is not available before FRA, and if she files before her FRA, she is first deemed to have started her retirement early and then gets any spousal addition that may be available.

A major difference between being married and not though is that he does not have to file for her to get a spousal benefit. If they were married, she couldn’t do anything other than claim her own benefit unless he filed or filed and suspended his benefit. 

In fact, for benefits off an ex-spouse’s record, no one has to coordinate or otherwise get anyone to do anything. Neither party is notified of what the other does or doesn’t do. They need not communicate in any way.

That said, if they’ve been out of touch, you may wish to have your client check-in on the ex-spouse. Why? Well, I don’t wish ill on anyone, but if he has kicked the bucket, she has other options and can get more money.  In the case of the deceased ex-spouse, the basic benefit becomes the deceased’s PIA, not half the PIA.  I’ll leave the dead ex jokes to others and just spend some time on the options available to surviving ex-spouses.

While spousal benefits off a living spouse’s or ex-spouse’s record cannot begin earlier than age 62, benefits for a surviving spouse or ex-spouse can begin at earlier ages.

Survivor benefits are available immediately regardless of age and duration of the marriage if the survivor is caring for a child of the survivor and the deceased worker,  that is under age 16 (or disabled), if that child receives benefits off the worker’s record. The basic benefit amount for this is 75 percent of the deceased’s PIA and is payable until the child reaches age 16 or is no longer disabled.

Survivor benefits are also available immediately if the survivor is at least age 60. The survivor can get 71.5 percent of the deceased’s PIA at her age 60. As usual, waiting to file means bigger checks with the benefit reaching 100 percent of the deceased’s PIA once the survivor reaches Full Retirement Age for survivors. Yes. FRA for survivor benefits is on a different scale from the one used for retirement benefits.

If the survivor is disabled before the worker’s death, within seven years of the workers death, while caring for a child receiving benefits on the deceased’s record OR within seven years after benefits to said child ended, the survivor can claim as early as age 50 at 71.5 percent of the deceased’s PIA. 

Just as filing for retirement benefits prior to FRA subjects benefits to the earnings test, receiving survivor benefits at early ages is affected by how much the survivor earns in wages. 

However, unlike filing for retirement early, filing for survivor benefits does not result in the survivor being first deemed to have begun her retirement benefits early. The survivor can claim survivor benefits, allowing her retirement benefit to grow, and switch to her retirement benefit as early as age 62 or as late as 70. She will earn delayed credits if she waits past her FRA.  She also has the option of filing for her own retirement benefit and switching to the survivor benefit at her FRA.

Of course, some clients have more than one ex-spouse.  It is possible to be eligible for benefits off each ex-spouse’s record, but the client can only collect on one at a time. 

It is also common to have clients that are currently married but also have an ex-spouse. Remarriage can eliminate eligibility for ex-spouse benefits but not always.

If a client remarries before age 60, she cannot get spousal benefits off an ex-spouse’s record while married to the new spouse.  Should that subsequent marriage end, her eligibility is restored. 

If the marriage to the new spouse also lasted 10 years or the new spouse died, she may be eligible for benefits off the first husband and off the second husband, but she can only take benefits off of one. 

Back to my client. Her ex is still alive. She is happy to hear that. She’s got more money coming to her than she thought and she has more confidence in her future. If you aren’t really basing your clients relationships on financial planning, you may be missing opportunities like this. Trust me. Your client won’t be the only one that benefits. Being able to notice something like this and turn it into a tangible boost to my client’s outlook is one of the things that drives me and brings me joy.

Dan Moisand, CFP, has been featured as one of the America’s top independent financial advisors by Financial Planning, Financial Advisor, Investment Advisor, Investment News, Journal of Financial Planning, Accounting Today, Research, Wealth Manager, and Worth magazines.  He practices in Melbourne, Fla.  You can reach him at [email protected].