Millions of people rely on Social Security benefits as their primary or secondary source of income in their later years. Too few of these people realize that divorce plays a significant impact in potential benefits. So we offer a quick rundown of the basics.
First, if you get divorced, you do not lose any of your own Social Security benefits. Whatever your work history, the benefits you have earned remained fully yours when you choose to retire.
Second, if you get divorced and your spouse earned significant income, you might have the ability to claim those benefits. IF (1) you were married for at least ten consecutive years, (2) you have been divorced for at least two years, and (3) you have not remarried OR your former spouse has died and you remarry after age 60, you can claim your former spouse’s benefit if it would be larger than your benefit.
Third, you cannot claim both your benefit and your former spouse’s benefit. You can only claim the higher benefit. So, if your former spouse was a higher wage earner, you can take advantage of that benefit.
Fourth, the amount you can claim of your former spouse’s benefit depends on when you take retirement. Generally, full retirement age is at 66 or 67, but you can claim benefits as early as 62. So, if your former spouse is retirement eligible when you turn 62, you can claim benefits early (with a 25% reduction) without impacting your individual retirement benefits. So, if you and your spouse have similar incomes or it would otherwise serve your interests to claim at 62, you could earn up to 8 years of your former spouse’s benefits while you wait for your benefits to reach peak value at age 70.
Fifth, if you remarry and divorce twice and both marriages lasted at least ten years, you can choose which former spouse benefit is larger. However, you cannot collect both benefits, only the larger of the two.
As you can see, for many people with a low wage work history, the former spouse benefit could be the difference between a livable retirement income and having to work in your later years just to make ends meet. It also may make a difference on when you choose to get divorced – if your marriage does not last ten years, the former spouse benefit does not apply, so remember that as you contemplate when to actually file and finalize a divorce.
If you have questions about Social Security and divorce, contact us – we can help.