You Can Claim Social Security Benefits Earned By Your Ex
Just because you’re divorced doesn’t mean you’ve lost the ability to get a Social Security benefit based on your former spouse’s earnings. You can receive a benefit based on his or her record instead of a benefit based on your own work record if you were married at least 10 years, you are 62 or older, and you are single.
Like a regular spousal benefit, you can get up to 50% of an ex-spouse’s benefit — less if you claim before full retirement age. And the beauty of it is that your ex never needs to know because you apply for the benefit directly through the Social Security Administration. Taking a benefit on your ex-spouse’s record has no effect on his or her benefit or the benefit of your ex’s new spouse. And unlike a regular spousal benefit, if your ex qualifies for benefits but has yet to apply, you can still start collecting Social Security based on the ex’s record, though you must have been divorced for at least two years.
Note: Ex-spouses can also take a survivor benefit if their ex died after the divorce, and, like any survivor benefit, it will be worth up to 100% of what the ex-spouse received. If you remarry after age 60, you are still eligible for the survivor benefit.
A claiming strategy if youre divorced: Exes at full retirement age who were born on January 1, 1954, or earlier can apply to restrict their application to a spousal benefit while letting their own benefit grow.
The Costs Of Taking Social Security Early
For starters, you’ll forfeit future increases in your monthly income if you take Social Security early. Claiming at age 62 reduces your benefit approximately 25% below the amount you are eligible for at full retirement age66 or 67, depending on the year you were born. Plus, your potential annual cost-of-living adjustment is based on your benefit. If you begin Social Security at age 62, your COLA will be lower too.
If you plan to claim benefits based on your spouse’s work record, you’ll lose even more by taking benefits before you are at full retirement age. The benefit reduction is greater for a spouse35% instead of 30%. For instance, if you’re the spouse of the person in the above example, you’d be eligible for only $520 a month at age 62, which is 35% less than the $800 a month you would get at your full retirement age.1
Your decision to take benefits early will live on even if you don’t. If you die, your spouse is eligible to receive your monthly amount as a survivor benefit . But if you take your benefits early, those payments will be less than they could have been for the remainder of your spouses lifetime.
Social Security: 10 Smart Ways To Get More Benefits
Without Social Security benefits, 22 million Americans would be poor per a report from the Center on Budget and Policy Priorities. About 21% of married elderly beneficiaries and 44% of unmarried ones get fully 90% or more of their income from Social Security, while about 48% of married elderly beneficiaries and 69% of unmarried ones get 50% or more of their income from it, according to the Social Security Administration.
How much money are we talking about? Well, the average Social Security retirement check was recently $1,417, or about $17,000 annually. If that doesn’t seem like much, know that there are ways to increase your benefits. Here are 10 strategies to consider:
Let’s examine each in more detail.
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No : Your Inflation Protection Will Be Less
Every year, Social Security will review how hot inflation has been and will adjust benefits if costs have risen sufficiently. The inflation adjustment for 2022 is a whopping 5.9%, which is the highest amount in decades. While everyone gets the same percentage increase, those who have a higher benefit level get more dollars from their inflation adjustment.
That amount compounds with every inflation adjustment, which means that it’s simply that much easier for someone who has delayed claiming Social Security to keep up with inflation over time. The table below shows the difference that waiting to claim can have on that inflation protection. It shows the potential range of pre- and post-2022 inflation-adjusted benefits for a person whose full retirement age is 67 and whose benefit at FRA in 2022 would be $2,000 per month.
Data source: Social Security. Table by author.
When you’re living on a fixed income, every little bit helps. Having both a larger everyday benefit and getting more dollars with that inflation adjustment by waiting past 62 can make the difference between staying comfortable and having to make tough choices.
What A Social Security Break
In a nutshell, a Social Security break-even calculator can tell you when the best age is to start taking Social security benefits, in terms of how much money you could expect to receive over time. Going back to the previous example, lets assume that you track your benefit amounts over a 10-year, 20-year and 30-year period. Heres how your total benefits received would look over each of those periods, for all three starting points.
Your cumulative benefits after 10 years:
- $144,000, starting at age 62
- $122,400, starting at age 66
- $52,800, starting at age 70
Your cumulative benefits after 20 years:
- $288,000, starting at age 62
- $326,400, starting at age 66
- $316,800, starting at age 70
Your cumulative benefits after 30 years:
- $432,000, starting at age 62
- $530,400, starting at age 66
- $580,800, starting at age 70
You can see that youd draw the most Social Security benefits in total if you wait until age 70 to start taking them, assuming you live to age 100. But that could be a big if when youre not in the best health.
What you have to keep in mind when using a Social Security break-even calculator is that the numbers are hypothetical. They dont take into things that could affect your ability to draw benefits or how far those benefits might go, such as:
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Reasons Not To Take Social Security At Age 62
One reason to delay your benefits is that Social Security will withhold part of your benefits if you earn more than the annual Social Security earnings limit. This only applies before your full retirement age of 66 or 67. A portion of your Social Security benefit is withheld and slowly paid back to you after you reach your full retirement age.
As of 2022, during the year you reach full retirement age, the Social Security Administration withholds $1 from your benefits for every $3 you earn above $51,960.
There is no reason to wait until you’re past the age of 70 to begin drawing Social Security.
In the years before you reach the year you turn full retirement age, the SSA withholds $1 for every $2 you earn above $19,560 .
You may also want to wait if you’re single, have little saved for retirement, and have a longer life expectancy. In this situation, you should consider working as long as possible to maximize your benefits then, wait as long as you can to begin your benefits, since you don’t have other retirement accounts to draw on.
If your spouse still works and has earned income, a larger portion of your Social Security benefits will be taxed if you start before your full retirement age.
Another consideration is if you’re married, your spouse’s benefit might be smaller than yours, and/or your spouse is much younger than you. When married, your combined life expectancy will be longer than either of yours as a single person.
How Much Can You Make And Draw Social Security At 62
If youre younger than full retirement age, there is a limit to how much you can earn and Page 3 2 still receive full Social Security benefits. If youre younger than full retirement age during all of 2021, we must deduct $1 from your benefits for each $2 you earn above $18,960.
Why do so many people claim social security at 62?
- The simplest explanation for why so many people claim Social Security at 62 is because they cant claim benefits any earlier. Many people count the days until they can get benefits because they need this money to leave the workforce or to survive comfortably if theyve already been forced out of a job.
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How Much Can You Earn In 2020 And Draw Social Security At 62
In 2020, the yearly limit is $18,240. During the year in which you reach full retirement age, the SSA will deduct $1 for every $3 you earn above the annual limit. For 2020, the limit is $48,600. The good news is only the earnings before the month in which you reach your full retirement age will be counted.
You Can Make Your Checks Bigger Or Smaller
The size of your ultimate Social Security checks is not written in stone. You can make them fatter or slimmer through timing. For every year beyond your full retirement age that you delay starting to collect your benefits , your benefits will increase in value by about 8%. Delay from 67 to 70, for example, and you can make your checks fully 24% bigger. If you would have started collecting about $2,000 per month at 67, you can instead start with around $2,480 per month at age 70.
That may seem like the obviously smartest thing to do, but it may not be. As the Social Security Administration has explained, “If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between.” In other words, for those with average life spans, it’s a wash. After all, if you delay starting to collect from age 67 to 70, you will miss out on three years’ worth of payments — that’s 36 payments.
Meanwhile, if you start collecting at 62, your benefits may be up to about 30% smaller. Don’t let that sway you too much, though. Remember — starting to collect at 62 instead of 70 will give you smaller checks, but you’ll receive eight more years’ worth of checks — 96 more of them.
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What Is Full Retirement Age
The size of your monthly Social Security benefit depends on a few factors, including how much you earned over the years, the year you were born, and the age when you start claimingdown to the month.
Youll receive your full monthly benefit if you start claiming when you reach what Social Security considers your full retirement age , sometimes also referred to as normal retirement age. FRA was 65 when Social Security began, but it has been raised to 67 for anyone born in 1960 or later. To find your FRA, see the chart below.
|Finding Your Full Retirement Age|
Tips For Getting Retirement Ready
- Retirement planning with a financial advisor can be extremely helpful. Finding a qualified financial advisor doesnt have to be hard. SmartAssets free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If youre ready to find an advisor who can help you achieve your financial goals, get started now.
- Figure out how much youll need to save to retire comfortably. An easy way to get ahead on saving for retirement is by taking advantage of employer 401 matching.
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No : Delay Your Divorce
This won’t work for everyone, but if you have been married for less than a decade and are planning to divorce, and if you are able to delay that divorce, doing so may serve you well. Divorcees may be able to claim benefits based on their ex-spouse’s earnings even if that ex has remarried if they were married for at least 10 years. If your future ex-spouse has a significantly stronger earnings record than you do, you may be able to collect a much bigger monthly benefit check based on his or her earnings than the one based on your own record. There are a few more rules related to this, so look into them if this might apply to you.
Taking Social Security At 62
Unless you meet a few clear-cut criteria, you’ll want to give the idea of taking Social Security at age 62 quite a bit of thought before you apply for benefits. Unless you have a critical illness, you’ll likely receive more income over your lifetime by starting your benefits later.
For example, let’s say that you live to age 84. You can get varying amounts, depending on whether you start Social Security at age 62, 66, or 70. To do the math, multiply your monthly benefit amount times 12 months, then multiply that by the number of years you expect to receive benefits.
- Age 62: $835 × 12 × 22 = $220,440
- Age 66: $1,114 × 12 × 18 = $240,624
- Age 70: $1,470 × 12 × 14 = $246,960
You get more total income by waiting until age 70 to begin benefits. If you live longer, the age 70 plan works even better for you than the examples above.
For instance, if you start your benefits at 70 and live to age 94, you’ll receive $423,360 from Social Security. If you’d started at 62, you’d only get $320,640.
In general, the longer your life expectancy, the longer you should wait to start drawing Social Security.
Below are a few general guidelines you can use to determine whether it makes sense to take Social Security retirement benefits at age 62.
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Who’s The Higher Earner
Compare the estimates for you and your spouse, and pay special attention to the difference between your estimates. The higher earner is the spouse with the larger primary insurance amounts .
When you’re deciding who will collect first and who should wait, consider having the lower earner collect first and having the higher earner wait. Over time, the higher earner’s increases will be worth more than the lower earner’s increases.
And if one spouse’s estimates are more than twice as high as the other’s, it might make sense for both of you eventually to collect on the same spouse’s earnings record.
In that situation, the spouse with the lower benefits can claim first based on his or her own earnings record and apply for spousal benefits later when the spouse with the higher benefits starts to collect.
The longer the spouse with the higher benefit waits to start collecting, the higher benefits will be for both spouses. Delaying the higher earning spouse’s benefits could also eventually increase the other spouse’s survivors benefits.
Early Benefits Can Still Pay Off
However, taking early benefits can still pay off despite the reduced monthly check. But youll want to be sure you budget for a reduced benefit.
No one can predict how long youll live, but if youre facing a potentially significant reduction in life expectancy and are short of income, taking Social Security early may be appropriate, Neiser says.
Married women are also good candidates for claiming early benefits because they are likely to outlive their husbands. Those widows then become eligible to receive the greater of either their benefit or their late husbands benefit.
However, this scenario works only if the husband does not claim his benefits early. By not claiming early benefits, the husband effectively increases the monthly benefit his wife eventually receives. So youll want to calculate how filing early will affect your spousal benefit here.
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Your Monthly Social Security Benefits Increase The Longer You Wait To Claim
You can collect Social Security benefits as soon as you turn 62, but taking benefits before your full retirement age means a permanent reduction in your payments of as much as 25% to 30%, depending on your full retirement age.
If you wait until you hit full retirement age to claim Social Security benefits, youll receive 100% of your earned benefits. But you can also get a big bonus by waiting to claim your Social Security benefits at age 70 your monthly Social Security benefit will grow by 8% a year until then. Any cost-of-living adjustments will be included, too, so you don’t forgo those by waiting.
Waiting to claim your Social Security benefits can help your heirs as well. By waiting to take her benefit, a high-earning wife, for example, can ensure that her low-earning husband will receive a much higher survivor benefit in the event she dies before him. That extra income of up to 32% could make a big difference.
No : Don’t Earn Too Much If You’re Working In Retirement
If you’re planning to start collecting benefits before your full retirement age and you want to work some then, too, be careful, because your benefits may be reduced. The Social Security Administration explains: “If you’re younger than full retirement age during all of 2018, we must deduct $1 from your benefits for each $2 you earn above $17,040.” The year you reach your full retirement age, the earning limit jumps to $45,360, and the penalty decreases to $1 withheld for every $3 earned above the limit. Any money withheld isn’t lost, though. It’s factored into the benefit checks you receive later, which end up increased.