Source: Wikimedia Commons
Social Security provides benefits not just for workers but also for their spouses. It's pretty easy to understand workers' benefits in retirement, as they're directly linked to that person's work history and are therefore unaffected by things like changes in marital status. But some more complicated rules govern the spousal benefits that workers' spouses are entitled to claim, and those benefits can change when you go through major life events. Specifically, couples considering divorce need to understand their Social Security benefits thoroughly in order to make informed financial decisions and avoid unknowingly causing payments to stop.
The general rule for divorced couples and Social Security
Most people considering divorce are relieved to find out that, in many cases, divorced spouses are entitled to the same benefits they would have received if they remained married. Specifically, if you were married to your former spouse for at least 10 years, you can claim spousal benefits based on your ex's work history when you turn 62 as long as you're still unmarried at that time. The amount of that spousal benefit is the same as it would have been as a married couple.
Indeed, divorced spouses actually have more flexibility than married couples in one instance. Regardless of when or whether your ex actually starts claiming benefits, divorced spouses are entitled to benefits calculated as if their ex had waited until full retirement age to start collecting Social Security. That can produce a clear advantage if your ex-spouse actually claimed early benefits and therefore accepted reduced monthly payments that would ordinarily cut your spousal benefits as well. In addition, your ex-spouse doesn't have to have actually claimed benefits in order for you to get spousal benefits as a divorced spouse. That's in contrast to usual rules that require a worker to apply for Social Security before a spouse can receive those benefits.
Source: Social Security Office of the Inspector General
How divorce can crush older couples on Social Security
Despite providing benefits to divorced spouses in many situations, the Social Security rules governing divorce aren't always so benign. For couples considering divorce in their early to mid-60s, those rules can disrupt what would otherwise be optimal strategies for Social Security.
For instance, many couples plan to have spouses file restricted applications for spousal benefits at full retirement age, allowing benefits based on their own work history to receive additional delayed retirement credits until age 70. But if you want to use that strategy, the Social Security divorce rules say that if your to-be-ex-spouse hasn't filed for Social Security, you have to wait two years after getting divorced to make your claim for spousal benefits. That can make the restricted-application strategy much less attractive and force you to consider other less lucrative alternatives.
Source: SSA
A much larger trap faces older couples who haven't been married for 10 years. You're entitled to apply for spousal benefits on your spouse's work history after being married as little as a single year, so those who marry in their late 50s or early 60s can initially apply for Social Security and receive benefits for years before reaching the 10-year threshold. If they divorce, however, the spousal benefits will be in jeopardy, as people aren't entitled to divorced-spouse benefits if they weren't married for at least 10 years.
Beware the Social Security remarriage trap
Finally, remarriage after divorce usually leads to your losing spousal benefits based on an ex-spouse's work history. The presumption is that your ability to claim spousal benefits on your new spouse's history replaces your former entitlement.
Social Security has a number of confusing provisions that can lead to unexpected results for those who don't look closely at the rules. Older couples who marry relatively late in life need to be particularly aware of how Social Security's provisions can adversely affect them. Otherwise, these traps can cut the benefits you're counting on for your financial future.
