In this video from the Motley Fool Answers podcast, Alison Southwick and Robert Brokamp welcome Sean Gates to the show as they answer listener questions.
This time, the cast digs into one of the more off-beat segments of the federal retirement program: spousal benefits and divorce. The rules can be complex, and they have recently changed for many Americans. Watch the segment to find out more.
A full transcript follows the video.
This podcast was recorded on Dec. 13, 2016.
Alison Southwick: Another Social Security question, this time from Stan. "My ex-wife is drawing Social Security benefits at the age of 60. Am I eligible to draw a spousal benefit off of her earnings and continue to let my Social Security build? We were married 27 years. Been divorced 10 years. Have not remarried."
Robert Brokamp: So here the requirement is to get Social Security based on the record of an ex-spouse. First of all, you have to be unmarried. You can't have been remarried.
Brokamp: You are age 62 or older. You're ex-spouse is entitled to Social Security retirement based on either retirement or disability and the benefit you are entitled to -- and this is the tricky part -- from the ex-spouse would be higher than what you'd get on your own. But that actually depends on your age.
So what he's talking about is something that changed very recently, so that not everyone can take advantage of it. If our fine fellow, here, was born before January 2, 1954, he can do that. He can, at his full retirement age, claim the benefit as a divorced spouse [and] let his benefit grow to age 70. If he was born after January 2, 1954, that no longer applies. You can no longer do that if you are not old enough.
Sean Gates: What Bro talked about was called "file and suspend", where you file, suspend your own benefit, and then claim your spousal benefit ... and that allows your individual benefit to continue to grow ... and then you can swap back to your own benefit.
Southwick: OK ...
Gates: But that got phased out recently, and that's the age ban that Bro was referring to. And then there is a restricted application where you don't do the file and suspend game. You just file for the spousal benefit only, with no anticipation of ever going back to your own benefit. You just claim the 50% of your spouse's benefit as a divorcee, and in this case, you can still do that but the wife would have to be 62 or older.
Southwick: Oh! Blah!
Brokamp: One of the interesting things about this question -- yes, it's very complicated -- is that he said his wife is 60, so she must be getting disability benefits because she's not old enough to get widow's benefits ...
Gates: Widow benefits if she's married multiple times.
Brokamp: One thing this demonstrates is how complicated all this is, so what I almost always recommend that people do is find a good online tool that will take your information and give you a good answer based on your own numbers. First of all, the Social Security Administration website has tools like that. There's also something called SS Analyzer from Bedrock Capital. AARP has a Social Security calculator and Financial Engines also has one. Those are all free. There are other ones that are also very good that you can pay like fifty dollars for and it's probably worth the money. They can crunch all of these rules together and give you some solid advice.