Ralph: Did you know that you may be eligible for social security benefits based on your ex spouses earning records even if you are married for as little as 10 years, you may qualify for this lesser known social security benefit.
That's we're going to cover on today's show.
Intro: Welcome to the Ask Ralph Podcast, where listening to an experienced financial professional with over 30 years of experience can help you make sense of confusing questions, current headlines, and industry trends about taxes, small business, financial decision making, investment strategies, and even the art of proper budgeting.
Ask Ralph makes the complex simple by sharing his real world knowledge from a Christian perspective with all things financial.
Now here's your host, Ralph Estep, Jr.
Ralph: Welcome to our motivational Monday show.
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I'm going to be talking about extended warranties on electronics and whether you should spend your hard earned money on them, it's going to be a great show talking about those extended warranties.
Today we're discussing the ins and the outs of social security benefits for divorced spouses.
I'll be honest.
When I first learned about this provision, I was surprised I like many people assume social security was individual.
What you put in is what you get out, but there were actually quite a few ways that a spouse, even an ex spouse factors into your benefits.
So I want to thank a listener who asked this question because it really gave me an opportunity to learn more about this in today's conversation.
We're going to cover the eligibility requirements, how the amount is calculated, some timing.
Considerations and tips for applying for this benefit.
My goal is that by the end you'll understand if this applies to your situation and how to navigate the process, it's not simple, but I'm going to break it down for you.
Well, let's start with today's relevant Bible verse.
This comes to us from the book of Proverbs chapter 13, verse 22.
And it says this.
A good person leaves an inheritance for their children's children, but a sinner's wealth is stored up for the righteous.
While divorce can be emotionally and financially difficult.
God can redeem the situation.
And provide for both parties in unexpected ways.
If we seek his wisdom and we seek his guidance.
To start let's clarify who qualifies for spousal or ex-spousal social security benefits.
Here are the main requirements.
Number one.
You must've been married for at least 10 years before divorcing.
The exception here is if you're caring for a child who is eligible for survivor benefits based on your former spouses earning records.
Then the length of the marriage doesn't matter, but generally it's 10 years before divorcing.
Number two, you cannot currently be married if you remarry, you lose eligibility.
Unless that later marriage ends, whether that be by death, divorce, or by annulment but that gets a little bit complicated.
Number three.
Your ex spouse must be eligible for social security, retirement, or disability benefits in order for you to claim spousal benefits.
So your ex spouse has to be eligible.
Number four, you must be at least 62 years old to collect spousal benefits based on an ex's record.
So in terms of calculation, The spousal benefit is up to 50% of your former spouse's primary insurance amount.
I'm going to get in the weeds here a little bit, but that's called their PIA.
But don't worry if you don't know their exact Pia.
And if they're your ex spouse, you probably wouldn't social security will calculate this from their earnings record.
The up to 50% means that if your benefit calculated from your own work history is higher than this 50% from your exes, then you're going to use your own benefits.
That would only make perfect sense.
So let's take a quick example.
Let's look at Sally and Joe.
Sally and Joe were married for 15 years before divorcing at age 50, Joe continued his career earning a healthy social security record.
While Sally struggled financially after the split.
Unfortunately this is very common for one party to Excel and one party to not do so well now Sally is 63 and Joe has started taking his social security retirement benefits.
Even though it's been over a decade sense of divorce.
Sally can apply for an ex spousal benefit up to 50% of Joe's primary insurance amount.
That's that PIA, this ends up boosting Sally's monthly income by $700.
Once she claims the benefit.
The lesson here is folks don't assume you won't qualify or benefit from this provision.
You need to reach out to social security with your marriage and work history And let them calculate if it's advantageous in your situation.
In addition to the meeting and the requirements around marriage length current marital status, ex spouse eligibility, and your age, timing comes into play when claiming social security, spousal benefits.
Here are a few things to consider.
As it relates to timing considerations.
As I mentioned already.
You have to wait until you're age 62 to claim spousal benefits based on an ex's record.
However, waiting beyond age 62 can allow those benefits to grow.
Social security increases payouts for eligible spouses.
Up until you reach your own full retirement age whether that's at 66 or 67, depending on your birth year.
Here's another thing to consider.
If your ex claims benefits early, this reduces the potential spousal benefit you can receive.
So in some cases, It makes sense for them to wait until their own full retirement age to file.
Here's another consideration remarriage as we discussed already.
It forfeits your eligibility for this spousal benefit.
So divorcing again, to regain eligibility rarely works out.
You gotta be very cautious about any marriage or divorce decisions based on this provision.
Now listen folks.
Another thing that adds some complexity are children, when it comes to timing, minor children from your marriage to your ex may be eligible for survivor benefits.
If your ex passes away, make sure to learn all the provisions, impacting children as you make claiming decisions.
The social security landscape around divorce and survivors contains many interlinking parts.
I had no concept about this till I dove into it.
Your own benefit.
A spousal benefit, survivor benefits from minors and a whole lot more.
I encourage you to patiently seek wisdom and educate yourself on the bigger picture when considering timing around this provision.
So let's talk about some application tips.
If you determine you're eligible and want to apply for social security benefits based on your ex spouse's record, here's some tips.
Number one.
This is very important.
Locate your divorce decree.
This is required to verify dates of marriage and divorce.
Social security will want to review it.
So you need to take that with you.
If you set up an appointment to go meet with them, Number two, check your ex's social security statements.
This let's you estimate the potential spousal benefits ahead of time.
Instead of relying solely on social security calculations.
Now this is going to require a reach out to them.
If you don't have a relationship with them, then you're going to have to rely on what social security is telling you.
Let's look at number three.
And this one is very critical.
You need to determine dependent benefits.
If you have dependents like minor children that could qualify for benefits, make sure to learn those provisions in tandem with the benefits you're looking to collect.
Number four.
You've got to weigh timing trade-offs as mentioned earlier, there are claiming ages and scenarios that boost or reduce your overall lifetime benefits.
It's important to take time to educate yourself on those nuances.
Number five submit paperwork early.
I'm going to say that again.
Submit your paperwork early.
And here's the truth.
Folks.
Applications can take four to six weeks to process.
So you've got to build in that buffer room on the timing.
And here's another critical thing.
This is number six.
Follow up and verify.
After submitting paperwork, circle circle back with, social security to ensure everything was received accurately on their end.
The truth is friends.
Errors can happen, but can be corrected early.
Understanding all the requirements, calculations and strategies related to social security can be so very complex.
I encourage you to take it one step at a time.
Seek out knowledgeable resources, whether they be people in your community.
Online education or meeting directly with representatives from the social security administration.
As with many financial decisions, small details make a huge difference.
So learn those provisions well for your unique situation.
Here's one thing I'm going to ask you to do visit our site and share this episode.
If this discussion on social security benefits for divorced spouses brought up more questions, head over to our website.
That's at askralphpodcast.com . We have resources on many, money topics from budgeting to taxes, your credit, retirement planning, insurance, and reducing debt.
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The more we can assist and educate one another.
And the more empowered we become the steward, our finances.
Well, Let's lift each other up around these critical areas that impact our peace.
They impact our freedom and security and our ability to be generous.
In closing as we covered today, divorce can present many emotional and financial challenges.
But here's the truth.
God cares deeply for both parties involved.
If you find yourself in this situation, cling to him for wisdom.
Cling to him for healing and provision.
Understand the practical options related to things like social security.
But most importantly, understand his heart for you as his beloved child, you have not been forgotten.
There is hope ahead.
Thank you for joining me today on the Ask Ralph podcast.
My goal was to provide practical financial wisdom while pointing to the one who cares deeply for your whole person, your body, your soul and spirit.
Be sure to visit, askralphpodcast.com for more resources to continue your learning journey and drop me a note.
If you have feedback or questions on today's show.
And as I always end the show with.
Stay financially savvy know that God loves you.
And God bless you today.
And every day.
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