Divorced retirees seeking to optimize their Social Security payments: A real-life example study
Susan, a 71-year-old divorced woman, has learned she is eligible for a higher Social Security benefit based on her ex-husband Robert's record. Susan's current retirement benefit is $890 a month, but she is now eligible to receive $1,549 a month by claiming the divorced spouse benefit and her own retirement benefit. This significant increase comes after she registered her claim to the shared spouse's advance pension of her ex-husband Robert on March 15, 2023.
The Social Security Administration (SSA) will calculate Susan's updated monthly amount based on her and her ex-husband's earnings records after Susan requests that her current benefit amount be adjusted to include the divorced spouse benefit. Susan meets all the criteria for divorced spouse benefits, including a duration of marriage exceeding 10 years, current marital status, age, ex-spouse's status, and independence from Robert's filing status.
It is important to understand Social Security divorced spouse benefit rules and consult with subject matter experts to optimize benefits. In Susan's case, her current retirement benefit is $890 a month, and her Primary Insurance Amount (PIA) is calculated as $1,187. If Susan had claimed her benefits at her Full Retirement Age (FRA) of 66, she would have missed the opportunity to claim the maximum amount of these benefits, losing about five years' worth of higher benefits.
Susan can receive the maximum spouse benefit, 50% of Robert's PIA, if the amount is greater than her own retirement benefit and if she collects it at her FRA or later. Robert's retirement benefit is $4,873 a month, which is an increase of 32% above his PIA if he had collected at FRA of 66. This means Susan is "dually entitled" to her own benefit and the higher benefit based on Robert's record, and the total amount she can receive is the greater of the two amounts.
If Susan encounters issues or disagreements with the SSA's determination, she can appeal the decision. The process includes reconsideration, a hearing by an administrative law judge, an Appeals Council review, and federal court review, with specific time limits for filing appeals at each stage.
Susan's case highlights the importance of understanding Social Security rules and consulting with experts to maximize benefits. Related content includes articles on gray divorce, qualifying for spousal and survivor benefits, both spouses collecting benefits, changes coming for Social Security in 2025, and when to apply for Social Security benefits.
Please note that the article was written by a contributing adviser, not the Kiplinger editorial staff. Their records can be checked with the SEC or FINRA. The rules governing these benefits are complex and can significantly impact retirement finances. It is always advisable to consult with a financial advisor or the SSA for personalised advice.
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