Now that summer is nearly over, I’ve started wearing some of the jeans I haven’t worn since spring. In one particular pair, I found $20 that was left in the pocket the last time I wore them. The “found money” brought me joy, but it was nothing compared to what this case study of "Stella" might have experienced. Let's set the scene...
Stella lived a challenging life. Stella and Robert were married for 15 years before they divorced in 1993 when he was 42 and she was 40 years old due to “irreconcilable differences”. Stella never trusted another man enough to ever remarry.
Robert moved out of state and Stella was left to raise her three children on her own. Stella and her children received child support until the youngest turned 18, and she received limited alimony from Robert.
Stella was a stay-at-home mother for the children’s early years and eventually made ends meet by working a waitressing job and later had a role at the deli counter in the local grocery store. Stella's ex-husband, Robert, was a regional manufacturer sales representative earning a six-figure annual salary plus bonuses.
In 2018, at 65, Stella filed for Social Security benefits based on her earning record. Her monthly benefit at the time was $1560 per month. Social Security benefits were her primary source of income. We asked her about her sources of income and were told about her Social Security Benefit which is now about $1750 per month. Stella shared with us when asked about her failed marriage. Robert and she rarely communicated with each other, and he had remarried about 10 years ago.
Since Stella's marriage lasted 10 years or longer, she has been divorced for at least two years, her ex-husband was eligible to receive SS benefits and she had not remarried, under the Social Security rules, she would be able to receive benefits based on her ex-husband Robert’s earning record even though he was remarried and her marriage to him ended over 30 years ago.
Stella got her marriage certificate and a copy of her divorce decree with the dates and locations of these events and scheduled a meeting with her local Social Security office. After reviewing her documentation and some other requested documents, she would be eligible for her existing benefit plus an additional amount based on Robert’s earnings bringing her new total monthly benefit up to $3120—an increase of $1370 per month or $16,440 per year! Depending on how long Stella lives, this strategy of filing based on her ex-husband's earning record could result in lifetime increased income of more than $100,000.
Social Security rules can be complicated. Sometimes the Social Security office makes incorrect statements or doesn’t ask the right questions to get the maximum benefit you may be entitled to. Before filing for Social Security, meet with a financial planner who can walk you through all the potential situations that you may not be aware of. An incorrect filing could mean hundreds of thousands of dollars of lifetime income missed.