To maximize your Social Security benefits, try and stay married for at least ten years.
If you’re moving ahead with a divorce as you’re nearing your ten-year anniversary, it could pay to wait when it comes to Social Security. The same waiting mentality may also pay off with future Social Security benefits if you’re planning to remarry as you approach retirement. Thus are the rules of the Social Security Administration when it comes to marriage and divorce and knowing the rules can give you thousands of extra dollars in retirement, says Andy Landis, author of Social Security: The Inside Story.
“It’s something to be aware of as you go through life’s major events—marriage, divorce and death,” Landis says. “It’s important to remember when thinking about your retirement, think about your ex-spouse benefit. There’s just a possibility that you can get more money there or that you could use it as a steppingstone so your own payment grows to age 70. Either way, whether it’s going to be your most payment or bridge strategy, make sure you think about that prior to your retirement. You could get something good out of that ex-relationship. It’s hard to go through a divorce and maybe this can be a silver lining.”
Social Security is available for former spouses if there was a ten-year marriage before the divorce, Landis says. It’s possible that’s where your highest Social Security payment is.
“When you think about your Social Security, be sure to think about what you can get as a former spouse and not just what you can get on your own work record, especially if your own work record is small because you were the one that worked on the home front,” Landis says.
Landis says that strategy only applies if the person filing for the benefits isn’t remarried. If the other spouse who has the higher benefit amount has remarried, it doesn’t matter and doesn’t affect their benefits. They won’t even know about it, Landis says.
When you go to file for Social Security, they will not hide that from you, Landis says. Instead, they will explore that with you because every application asks a couple of nosy questions, he says: Were you married now and were you ever married before? If they see a ten-year marriage, they will see whether you can get paid more on that person’s record or if your ex can be paid more on your record.
It doesn’t matter if he has a current spouse. If you had a ten-year marriage, you have rights to those benefits when you’re retiring, he says. Landis says the Social Security rules, however, may be having an impact on people. When looking at divorce rates for those 35 to 55, it jumps up to six percent at the ten-year mark. It bumps up 11.7 percent at the ten-year mark for those who turn 55, he says.
“I think this raises a pretty interesting decision,” Landis says. “If you’re considering a divorce, and you’re really close to your ten-year anniversary, you might want to postpone signing those papers until your ten-year anniversary goes by. That could make a big difference down the road. What you could be doing is keeping a door open to those benefits. This goes for guys as well as gals, but especially for women because on average they earn less than men. Let’s say he dies ten years down the road. I’m not suggesting this as an incentive or anything. If they die down the road, you can draw up to 100 percent of his Social Security benefit, which on average would be more than 100 percent of yours.”
That would only apply in getting that widow benefit as long as the person seeking the benefits hadn’t remarried until they turned 60, Landis says.
“If your ex is deceased and you’re currently married, you can get that ex-spouse rule–but there’s this weird rule–only if you marry after age 60,” Landis says. “If there was a late in life marriage, they won’t let that stand in the way of a widow payment on your ex-spouse. So if you’re thinking about getting married and you are two weeks before your 60th birthday, you might want to postpone that marriage if you have a former spouse, deceased spouse or any of the above. Because, if you’re married after 60, it doesn’t stand in the way of some kind of benefits.”
The marriage and divorce rules even apply to spousal payments, which people use to get a portion of the benefits of their spouse until their own benefits kick in, Landis says. For most people, the spousal payment is small. It maxes out at 50 percent of your exes benefit, and your own benefit might be more than that. Both ex-spouses can take advantage of it.
“I worked with a guy down in Los Angeles who turned 66,” Landis says. “He waited until 66 to file. He thought he wanted to get as much as he could and waited, which is good. He filed for his own Social Security, and got a 100 percent payment on his own Social Security because he was 66. He got two months of payments and then he found out he could have gotten more in his own benefits if he filed on his ex-spouses record for the first four years before switching to his own at 70.”
Landis says the man cancelled his own claim because it was blocking his access to these smaller ex-spouse payments. After undoing that, he filed as a spouse on his ex-spouse record. He’s only getting a 50 percent payment–even if it’s less than $1,000 a month he receives now–that’s fine because his own payment is rising eight percent a year in the background, he says. If he was scheduled to get $2,000 a month at 66, that will grow to $2,640 when he turns 70.
“When he switches to his own at 70, he’ll drop out of the spousal payment, he’ll get a 132 payment for the rest of his life. In the long run, that’s going to pay more money,” Landis says. “He’s using his ex-spouse payment as a bridge until his own gets bigger at age 70. It’s pretty cool.”
Landis says what’s great about it is both can draw the spousal benefits from each other and not even know about it. Even drawing half of his benefit while waiting for hers to get bigger maybe the most she can ever get, he says.
“When he dies and she survives him, she gets a raise to whatever he was getting. If he was getting $2,640, she gets $2,640 also,” Landis says. “These ex-spouse benefits are huge. They’re normally in the background with people saying that I’m better off on my own work record or better off with my current spouse. If you have a current spouse, pretty much all of the doors are closed unless your ex-spouse is deceased.”
People, meanwhile, shouldn’t let rules always dictate their decisions, Landis says.
He says he met with his ex-spouse and she asked what’s the deal on her Social Security. They’re both younger than 66, and Landis says he told her she can draw on his Social Security first and then draw 132 percent on hers at 70.
“I told her that’s probably going to be your best payment route,” Landis says. “There’s only one problem to do that. You have to be single, and she was planning to get married. I told her that, and she said she’s getting married anyway. We shouldn’t let that drive our decisions unless we’re desperate for money.”