Social Security and Divorce – Plan Ahead

On behalf of Ronald H. Kauffman, P.A. posted in Planning for Divorce on Monday, August 12, 2013.

Anyone planning for divorce needs to consider the impact of Social Security benefits. This is especially true if you are close to the age at which you become eligible for benefits, but haven’t started to receive them yet. If you think Social Security claims, benefits and entitlements are confusing, you are not alone.

In general, once you are divorced, you can receive spousal Social Security benefits based on an your ex-husband’s or your ex-wife’s earnings, as long as your marriage lasted at least a 10 years, you are a minimum of 62 years of age, are not married, and do not qualify for a higher benefit based on your own past earnings.

As a matter of divorce planning then, and theoretically, if you were only married 9 years, you may want to put your divorce plans on hold so that you could receive spousal benefits.

Additionally, if an ex-spouse delays claiming Social Security benefits until full retirement age, they can start to collect a spousal Social Security benefits check of 50% of an ex-spouse’s retirement benefits.

They might also be able to continue working – and even increase the eventual amount of their own personal Social Security retirement benefits – by delaying retirement, until age 70. When an ex-spouse reaches age 70, their Social Security monthly retirement check would be approximately 132% larger than it otherwise would have been, and even larger depending on annual cost of living increases.

One complication is that a divorced spouse can only receive a spousal Social Security benefit 2-years after a divorce, if an ex-spouse has not yet applied for his or her own retirement benefit.

There are a lot of other Social Security Administration rules which can complicate this straightforward analysis. The rules regulating Social Security could change at any point in time, and suddenly delayed benefits might no longer be recognized. Or the criteria for divorcing spouses can be changed to 5 years from the 2 years stated above.

What happens if the Social Security rules change? It may depend on the status and wording of the law at the time you divorce. So, not only can the current rules cause you immediate problems, but the plans you made – which were correct at the time you made them – might be wrecked by a rule change.