What She Doesn’t Know About Social Security Could Cost Her Thousands

Q. My mother, Eileen, and her husband, Ray, just recently got divorced after 15 years of marriage. My step-father was the primary breadwinner throughout their marriage, while my mother was a homemaker, who worked a little here and there.

Now that she’s turned 62, my mother wants to begin collecting Social Security as her sole income source, which wouldn’t be much and she’d have to live on a very tight budget. I told her she could take advantage of her spousal benefits, since she and her husband were married for over 10 years, but she doesn’t think that’s the case and wants nothing to do with anything involving her ex. Am I correct about the spousal benefits, and where could I send her to learn more about Social Security, so she doesn’t lose thousands of dollars due to her lack of awareness? Thanks for your help!

A. A recent AARP survey, conducted in conjunction with the Financial Planning Association, found that there is a serious knowledge gap in some critical areas when it comes to Social Security. Similar to your mother, one-third of those surveyed didn’t know they could collect at all based on their ex-spouse’s work record. And, only a quarter knew that spousal benefits are available to unmarried ex-spouses, if the couple had been married at least 10 years. The same lack of knowledge held true when it comes to what age to begin collecting, and survivor benefits for widowed spouses.

To help those who are unsure, we came up with a detailed Social Security FAQ on our Website. In addition, below is information for your mother about qualifying for a “divorced spouse” benefit:

-In order to qualify for a “divorced spouse” benefit, your mother must be at least 62 years old (the age of her ex doesn’t matter).

-The maximum benefit she could receive is 50% of the amount her ex is entitled to at full retirement age.

-Her ex-spouse must either be: 1) receiving Social Security disability benefits, or 2) eligible for Social Security. (Someone becomes eligible for Social Security by earning a minimum amount of income from at least 10 years of work in jobs where s/he had Social Security (FICA) tax taken from paychecks.) If her ex hasn’t filed yet, then she must be divorced at least two years.

-She must be unmarried when she files. If she starts receiving divorced spouse benefits and later remarries, she will probably
lose them.

-If she works, the so-called “earning limit” applies. This year the limit is $15,480. For every $2.00 above this amount, her benefit will be reduced by $1.00. (The “earnings limit” applies only to income from a job; investment income does not count.)

-If she begins a divorced spouse benefit before her FRA(Full Retirement Age), Social Security will first check to see if she would get a bigger check based upon her own work history. She will receive whichever benefit is higher, and she is locked into this.

-Her ex will never know she filed for Social Security based on his record.

-In case your mother cares, if her ex-husband has re-married, your mother’s divorced spouse benefit will not reduce the amount his new spouse is eligible to receive.

An important point to understand: If your mother’s ex-husband was a police officer, for example, or someone who contributed to the state employees’ retirement plan instead of Social Security, he may not be eligible for Social Security benefits and, consequently, your mother would not be eligible for benefits as his divorced spouse.

Reasons to Defer Social Security Benefits

If you collect Social Security benefits at age 62 (the earliest you can do so), you’ll pay a penalty of 25% or more in your monthly benefits by filing before FRA. In addition, if you are divorced, there may be two earnings records: one based upon your own earnings record and one based on your ex-spouse’s. Once you reach FRA, you can choose which type you want to receive. However, based on what you described, your mother’s ex’s benefit will most certainly be the higher amount. So, if she needs the money to make ends meet now, then her immediate need is most important, and she should consider taking benefits as soon as she can.

Be Prepared

Don’t expect the employees at Social Security to simply tell your mother the size of the benefit her ex has earned. She will probably even have to prove that she was, in fact, married to this individual and subsequently divorced. So, if she plans to file for benefits by visiting her local Social Security office, she should bring her marriage license and divorce decree with her. If she files by phone, she might have to mail copies of these documents. For more information about the documentation you might have to provide, click here.

Below are tools related to Social Security and retirement planning, that can provide more details:

• For lots of additional details about Social Security, including spousal benefits, please visit our Social Security FAQ page.

• Check out AARP’s Social Security Planning guide.

• To estimate how much you will receive in Social Security retirement benefits, visit the Social Security Administration’s website.

Since your mother is looking to Social Security to make up almost all of her retirement income, she should really have incapacity planning documents in place, in case she should become incapacitated. In fact, every adult over the age of 18 should have an Incapacity Plan that includes a Financial Power of Attorney, an Advance Medical Directive, and an Advance Care Plan. If she doesn’t have an Incapacity Plan in place, or if she hasn’t done estate planning or long term care planning, call us to set up an appointment for a no-cost initial consultation:

Fairfax Elder Law: 703-691-1888
Fredericksburg Elder Law: 540-479-1435
Rockville Elder Law: 301-519-8041
DC Elder Law: 202-587-2797

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