Thank HEAVENS!  What would we do without Diane Owens, our social security guru, to translate the convoluted rules and regs of the Social Security Administration?!  In this Ask The Expert question, Diane untangles for us the all too common situation of a now midlife woman, recently divorced, working but wondering how she’s going to make up in retirement for some lost career years while she was raising kids.

Diane gives us the scoop, and a great example that makes it much clearer!  Be sure to pass this one on to any friends you have who may be in a similar situation. 

We have asked Diane Owen, our Social Security guru, to help us out on this social security question:

Question from Margaret T in Houston, Tx.

I was divorced 5 years ago at age 46.  I had worked some but not all the 21 years we were married (some time off to raise kids).  I’m working now and intend to work from here to retirement in my late 60s.  How will all that affect my social security?  Will I be entitled to some social security based on my ex’s earnings since he will have earned considerably more than I could hope to do?  Or, am I on my own?
 
Diane says:

As long as your marriage lasted 10 years or more, your ex is at least 62 years old and you are unmarried at the time you apply for Social Security benefits, you are potentially eligible for benefits as a divorced spouse.  Since you worked under Social Security for at least 10 years, you will also be eligible for retirement benefits.  Your annual Statement from Social Security will show how much your retirement benefit will be or you can use the Social Security web site Retirement Estimator  (link to: http://www.ssa.gov/estimator/ ) to get an online estimate at different ages.  To find out how much you could receive as a divorced spouse, you will need to contact your local Social Security office to get an estimate.  Be prepared to give them your ex-husband's name and SSN or date of birth if you do not know his SSN.
 
Once you have an estimate of both your own retirement and benefits as a divorced spouse, compare them. Normally, you can only receive the higher of the two amounts.  But if you wait until your Full Retirement Age (age 66 if you were born between 1943-1954) to apply, you will have a choice of applying for only the divorced spouse's benefit and switching to a potentially higher retirement benefit at age 70.  

The best way to explain why you might want to do this is to give an example:

1. Mary's Statement estimates that her retirement benefit at 66 would be $1000/month.  Social Security tells her that her benefits as Joe's ex-wife would be $800/month.  When she applies, Mary will receive only her own retirement benefit of $1000/month.  No additional benefits as a divorced wife are payable since her retirement benefit is higher!

1. There is a way Mary can get both benefits, but to do so she would have to apply only for the lower ex-wife's benefit of $800/month at age 66 and then switch to her own higher retirement benefit at age 70.  This way she can qualify for a delayed retirement credit that will increase her retirement benefit to $1320/month beginning at age 70.   By delaying her retirement benefit, Mary will receive $200/month less between age 66 and age 70, but she will qualify for a delayed retirement benefit that is 32% higher beginning at age 70.

If Mary lives until she is 85 years old, she will have received a total of $228,000 in retirement benefits under option #1 compared to $276,000 in divorced spouse & retirement benefits under option #2.

Taking a lower divorced wife's benefit at your Full Retirement Age (FRA) and switching to your own retirement at age 70 may not be the best option for you if your benefit as an ex-spouse is very much higher than your retirement benefit. And if you apply for reduced benefits before your FRA, you will not be allowed to choose between a retirement or spouse's benefit; only the higher benefit will be paid.
 
Diane Owens is a whiz at Social Security, having worked at the SSA for 35 years.  For more tips on Social Security, visit her blog "Social Security for Boomers".  Thankfully, Diane also offer her services as a consultant to individuals and couples to help them maximize their Social Security benefits in retirement and she is available as a speaker on "all things Social Security."  For more information, contact Diane at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

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