Divorced? This New Social Security Rule May Apply to You
Divorcees should keep an eye on newly revised rules that now apply to Social Security benefit claims. In November 2015, Congress passed the Bipartisan Budget Act, which added a new set of rules for divorced individuals who meet certain criteria.
Key Claiming Strategy that Most People Miss:
A divorcee who is currently single, but was previously married for at least 10 years is qualified to collect on an ex-spouse’s Social Security benefits – even if the ex-spouse has since remarried. If both individuals are at least 62 years old and have been divorced for at least two years, the ex-spouse is independently entitled to claim Social Security benefits on a former spouse’s earnings record, even if his or her ex has not yet started to claim benefits. Furthermore, ex-spouses born ON or BEFORE Jan 1, 1954, are permitted to collect on their ex’s benefits, while leaving their own benefits untapped and left to grow until they reach the age of 70.
In order to claim an ex-spouse’s benefits, while leaving your own intact, you must file a restricted claim for spousal benefits. Filing a restricted application tells the Social Security Administration that you are not applying for all of the social security benefits you are eligible for at the same time.
New Rules Limit Restricted Claims to Those Born Before 1954
The new Social Security benefits rules, which were signed into law on Nov. 2, 2015, limit restricted claim applications to only those who were born on or before Jan. 1, 1954. In addition to being of full retirement age and born before 1954, the applicant must also not have begun claiming their own Social Security benefits to comply.
Anyone born on Jan. 2, 1954 or later is not permitted to file restricted claims for spousal benefits, meaning that when they file for a spouse or ex-spouse’s benefits, they are filing for all of the benefits they are entitled to, including their own.
Exceptions to the New Rules
There are generally two exceptions to these new rules.
One exception to this age limitation is for widows and widowers, who are permitted to file restricted applications at any claiming age. Widows and widowers may file a restricted application regardless of when they were born and even if they have not yet reached full retirement age.
Another limited exception to this new rule is for claimants caring for a child under the age of 16 or a for a disabled child of any age. In some cases, those who are eligible for a dependent child’s benefits may also be able to file a restricted claim on a spouse’s or ex-spouse’s benefits at any age.
Full details about restricting your scope of benefits can be found at the Social Security Administration’s website in its Program Operations Manual System. The Social Security Administration also has a useful Social Security calculator that may also help shed some light on the best claiming strategy for you; however, it is best to also consult with a financial advisor to ensure you are factoring in all earnings and liabilities in the equation.
Social Security benefits claims and the rules surrounding them can be complex and may impact your financial planning strategy, particularly as it relates to retirement. Whether you are divorced, widowed, caring for a dependent child, or simply aren’t sure about which Social Security claims benefit strategy is best for you, contact your financial advisor to determine the best Social Security approach for you and your family.