For Mark Roberts’ Use: As you might already know, the Bipartisan Budget Act of 2015 triggered significant changes to the Social Security system. In particular, Congress decided to close the “file and suspend” loophole, which helped many married couples maximize their benefits. However, there is another group of people who will be affected: Those who are divorced might be impacted even more significantly by the new rules. In most cases, divorced women will see the most changes to their potential Social Security benefits.

With the loophole in place, the spouse with the most work credits could file for benefits at full retirement age, but then suspend their payments to allow for a larger benefit over time. At the same time, the lower-earning spouse could file for spousal benefits and receive checks for half the amount of their higher-earning spouse’s benefit.

While this strategy was commonly used by married couples, it also sometimes benefited divorced people. In particular, the former spouse who accumulated fewer work credits over time – often due to taking time off from their careers to care for a growing family – could still access spousal benefits even if their former spouse suspended their own payments. This strategy provided a safety net to those who found themselves divorced after years of dedicating their lives to their families.

Under the new rules, spouses and former spouses can no longer claim spousal benefits if their spouse (or ex spouse) suspends their own payments. Since a person really has no way of convincing their former spouse not to suspend their own benefits, this leaves lower-earning former spouses vulnerable to a serious lack of retirement income.

Since lower-earning spouses can no longer count upon receiving spousal benefits one day, this underscores the importance of retirement planning for everyone! Call us for a consultation, and we can help you put together a retirement plan of your own, so that you don’t have to depend upon the decisions of your former spouse.