A marriage may end but not Social Security benefits

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Despite a modest decline in the divorce rate over the past decade, more than a half million people get divorced every year, according to the US Census Bureau (2023).

Divorce is a major life change and can be overwhelming, not just emotionally, but also when dealing with issues such as property division, custodial arrangements and, in some cases, spousal support.

This life change also requires attention to financial planning. Individuals need to make sure they do not overlook key issues and considerations related to financial planning around taxes, retirement, estate planning and risk management. It is also important to plan for liquidity and cash management to handle expected expenses from divorce proceedings like legal fees and other unforeseen costs and circumstances.

Financial review

Couples may want to conduct a full financial review prior to—and even after—a divorce, to take into consideration the potential impact on cash flow, taxes, retirement benefits and other sources of income and expenses.

It can also be important to understand how Social Security benefits apply to divorced individuals. If you meet certain requirements, a divorced individual can receive Social Security benefits similar to a married spouse.

Benefits vary depending on age

• Depending on your age when you file for divorced spousal benefits, you could receive as much as 50% of your ex-spouse’s primary insurance amount (PIA), basically the amount of retirement benefits they are eligible to receive at full retirement age (FRA).
• If you file prior to your FRA, the amount you receive will be less. For example, if you claim at age 62, you would receive 32.5% of your ex-spouse's PIA instead of 50%.
• Even if your ex-spouse claims their own retirement benefit prior to their FRA, it doesn't mean the benefit you claim based on their earnings record is reduced. For example, if your ex-spouse chooses to receive a reduced benefit by claiming their own retirement benefit at age 62, if you wait until your FRA you would still receive 50% of their PIA (the benefit amount your ex-spouse would have received if they waited until their FRA to claim benefits).
• When you are divorced and file for benefits, the Social Security Administration will determine which calculation will yield a higher benefit. This could be a retirement benefit based on your own working history, or a benefit as a divorced spouse based on your ex-spouse's earning record.

The impact of remarriage

If you remarry, you forgo benefits based on your ex-spouse's earning record (unlike survivor benefits where, if you remarry, once you reach age 60 you can still receive survivor benefits based on your deceased spouse)

Other important considerations

• Conceivably, if you were married to more than one individual for at least 10 years, you could have the choice of whose earning record would apply when filing for benefits as an ex-spouse.
• Unlike a regular spousal benefit, a divorced individual does not have to wait until their ex-spouse files for their own retirement benefit before filing and claiming a benefit as an ex-spouse, if the divorce occurred at least two years prior.
• Similar to a spousal benefit, you cannot claim a benefit based on an ex-spouse's earning record and defer your own benefit. When filing, the SSA will determine which benefit is higher–the benefit based on an ex-spouse or your own retirement benefit based on your earnings history.
• If your ex-spouse dies, then you can begin claiming survivor benefits based on the amount of the Social Security benefit they were receiving prior to passing away. The amount of the survivor benefit received will also depend on whether or not you claim the benefit prior to your FRA. For more details on survivor benefits, see our recent post, “Six things to know about Social Security survivor benefits.”
• If a divorced spouse qualifies for benefits, it will not affect the amount of total benefits a family may receive (known as the family maximum)¹

¹For individuals receiving Social Security retirement benefits, other family members such as dependents may also qualify to receive benefits. The Social Security Administration limits the amount of benefits an entire family can receive. Generally, the total amount an entire family can receive is about 150% to 180% of the full retirement benefit of the primary individual.