How Do Social Security Benefits for Divorced Spouses Work?

Regular listeners of the Motley Fool Answers podcast will know that Alison Southwick and Robert Brokamp are full of excellent investing and personal finance advice. But for this episode -- which they are dedicating totally to listener questions -- they've called in reinforcements: Ross Anderson, a certified financial planner from Motley Fool Wealth Management, a sister company of The Motley Fool.

In this segment, they dig into the relatively confusing subset of the Social Security systems rules around benefits for divorced people. If your ex made a lot more than you, it would appear that you can do better taking a fraction of their benefit. But it's marginally more complicated than that.

A full transcript follows the video.

This video was recorded on Feb. 27, 2018.

Alison Southwick: The next question comes from Kathy. "I'm writing because I'm confused about Social Security divorce benefits. I thought it was 50% of the higher-earning spouse, but according to Social Security's website, if you are eligible for retirement benefits on your own record and divorced spouse's benefits, we will pay the retirement benefits first. If the benefit of your ex-spouse's record is higher, you will get an additional amount on your ex-spouse's record so that the combination of benefits equals that higher amount. I won't get any benefits if my benefit is greater than 50% of his?"

Robert Brokamp: Right. She included a quote from the Social Security website.

Southwick: That was pulled straight from it, which is riveting stuff.

Brokamp: It is riveting, and it's not clear at all. So much of Social Security is pretty complicated, including benefits for divorced spouses. Let me talk a little bit about that.

You can receive benefits based on your ex-spouse's record if you were married for at least 10 years and you have not remarried. It doesn't matter if your ex-spouse has remarried, but you cannot have been remarried. The benefit is 50% of your spouse's benefit at his full retirement age or your own benefit, whichever is greater.

Here's what is confusing, though. Let's say, for example, you would get $300 based on your own benefit [just on your own work record] and your spouse would get $1,000. You would get either $300 or half of the spouse's thousand, which is $500. So, you'd think, "Of course, $500 is easier," and they would just say, "Your $500 is your divorced spouse benefit." But that's not what they say. What they say is, "You get your $300 plus we're going to make up this difference of $200 as the divorced benefit." I don't know why they do that, but that's the way they do it, so when you read about divorced benefits, it's part of why it's kind of confusing.

A few other things to keep in mind with the divorced spouse benefit. If you take it at age 62, which is early, it will be reduced. If you delay past your full retirement age, which for most people around these days is 66, you don't get a bigger benefit. So, if you're going to get the divorced spouse benefit, it doesn't pay to delay it past your full retirement age.

If your ex-spouse is deceased, you might be eligible for survivor's benefits, and that you can take as early as age 60. And you can still get it, even if you got remarried after age 60. This is all kind of confusing.

Anderson: Clear as mud.

Brokamp: Clear as mud. To answer your fundamental question, which was, "So, I don't get any benefits if my benefit is greater than 50% of his," the answer is yes, you will get benefits, but it will just be based on your own record. You won't get any benefit as a divorced ex-spouse.

Do you have any experience, by the way, of calling the Social Security Administration?

Ross Anderson: No.

Brokamp: Here's the thing. I would normally say to people you should call the Social Security Administration to get all this clear...

Anderson: It's not personal experience. I've talked to people that have done it.

Brokamp: Yes. And I would say half the time when I've talked to people that have done that, the Social Security Administration has given them incorrect information.

Southwick: Oh, really!

Brokamp: It's kind of common knowledge in the financial planning industry. I don't want to slam the people who work for the Social Security Administration. I'm sure they're all hard-working, nice people, but it's so complex. It's another situation where I think it actually could be worthwhile to pay a pro who's an expert in Social Security to help you on the decision of when to take it.

Anderson: The other thing is that they're not strategists. So, if you ask them a very specific question, they're not going to try and look through your question to figure out what you're really asking. If you say, "Can I do X and you can do it," they'll be like, "Yes."

Southwick: You are legally able to do that.

Anderson: And that may not be the best option for you, but they may have still been correct.

Brokamp: Right. It's not their job to maximize your benefit.