Note: with the passage of the Bipartisan Budget Act of 2015 into law, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article The Death of File & Suspend and Restricted Application for more details.
Social Security filing decisions are tough enough – and so is being divorced. Add the two together and you have all sorts of complications. In this article we’ll review one type of complication with Social Security filing for divorcees that can work in your favor and one that can work against you.
Let’s start with the provision that may work against you – Deemed Filing.
When you file for benefits prior to Full Retirement Age (FRA, which is 66 for folks born between 1943 and 1954, ranging up to age 67 if born in 1960), a provision called “deemed filing” takes effect. Deemed filing means that you are “deemed” to have filed for all available benefits – generally meaning your own benefit and any spousal benefit that you are eligible for as of the date of filing.
The reason that deemed filing might work against you if you’re divorced is because of the nature of eligibility for spousal benefits for a divorcee: You are automatically eligible for spousal benefits based on your ex-spouse’s record when either the ex has reached age 62 and the divorce has been final for two years, or when the ex files for his or her own Social Security benefits, whichever occurs first.
For a currently-married individual, spousal benefits are not available until the spouse has applied for his or her own benefit. Because of this, the married individual has a bit more control over his or her filing for spousal benefits, since the couple can discuss and time the two filings in order to separate retirement benefits from spousal benefits. As a divorcee you have much less control over this decision.
For example, Lou divorced her husband Ed five years ago after a 10+ year marriage. Lou is going to reach age 62 this year, and she would like to file for her own benefit now, and then delay filing for the spousal benefit based on Ed’s record until she reaches FRA, age 66. The key here is Ed’s age. If Ed is already age 62 or older, Lou does not have the option of separating her retirement benefit from the spousal benefit.
On the other hand, if Ed reaches age 62 at least in the month after Lou reaches age 62, Lou could file for her own retirement benefit any time after she reaches age 62 but before Ed reaches age 62, effectively separating her own retirement benefit from the spousal benefit based on Ed’s record.
Another way that this separation could occur is if the divorce had not occurred more than 2 years before Lou’s reaching age 62, and Ed has not filed for his own benefit prior to Lou’s filing.
So in our example, if the divorce was only finalized earlier this year and Ed has not filed for his own benefit, Lou could file for her own retirement benefit separately from the spousal benefit any time before the two-year period after the divorce has elapsed – as long as Ed doesn’t file for his own benefit before that period has elapsed.
This is also dependant upon the fact that Lou remains unmarried. So another way to separate these benefits would be for Lou to re-marry, and then file for her own benefit at any time. The remarriage nullifies Lou’s eligibility for spousal benefits based on Ed’s record. The eligibility for spousal benefits based on Ed’s record is restored if Lou’s current marriage ends (either by a subsequent divorce or death of the current spouse) – but since she wasn’t eligible when she filed for her own benefit, deemed filing did not apply and she can control when she files for the spousal benefit.
On the other hand, as a divorcee you may have special treatment available to you in filing a restricted application for spousal benefits.
The restricted application is an option where an individual can, at Full Retirement Age or later, file strictly for spousal benefits only while delaying filing on his or her own retirement benefit until later when delayed retirement credits have accrued. He or she must not have filed for any Social Security retirement benefits previously.
In order for an individual to be eligible to file a restricted application, of course that person must be eligible for a spousal benefit. As a divorcee, the same rules that restricted you in the deemed filing section above have a tendency to liberate you at this stage. Since eligibility for spousal benefits is based only on the age of your ex-spouse and the time elapsed since the divorce was finalized, a unique situation is available. Both spouses could be eligible to file a restricted application.
On the other hand, for a married couple only one spouse can be eligible for a restricted application – because eligibility for spousal benefits for married persons depends on the other spouse filing for his or her own benefit. In doing so, of course this person could not file a restricted application.
Back to our example couple, Lou & Ed: Lou chose not to file for her own benefit at 62, and Ed delayed as well. When Lou reaches FRA (as long as she’s unmarried), she can file a restricted application for spousal benefits based on Ed’s record. This is because she is at or older than FRA and she is eligible for spousal benefits due to the fact that her divorce has been finalized for more than 2 years and Ed is at least age 62. Ed’s filing status doesn’t matter to her eligibility.