We all know that divorce can make a deep impact on our financial lives, especially during the immediate time period surrounding the event. However, some people are surprised to discover, a decade or more after the divorce, that the consequences are more far-reaching than they had imagined! In particular, those who expect to claim Social Security spousal benefits should brush up on their knowledge of Administration’s rules. We don’t want you to be caught off guard when it’s time to retire.
You must be married for ten years in order to claim spousal benefits in the future. Those who divorce before the ten-year mark miss their opportunity to claim spousal benefits on their former spouse’s work record one day – even if you had children together.
You won’t lose spousal benefits if he/she remarries. If you’re otherwise eligible for spousal benefits through Social Security, you won’t lose those benefits if your former spouse remarries. However, you will lose them if you remarry. This is something to carefully consider, on multiple levels, before remarrying.
You can receive spousal benefits if your former spouse dies. Their death won’t affect your eligibility, as long as you are otherwise eligible.
Your spousal benefit amount is based upon your former spouse’s earning record. Social Security calculates everyone’s benefits according to their 35 highest-earning years of work. As a spouse or former spouse, your spousal benefits check will amount to half of that benefit. If your former spouse retires early, becomes disabled, takes a big pay cut, otherwise makes less money than you would have anticipated, this could negatively impact your future spousal benefits amount. Obviously, you can’t really control those factors whatsoever.
You can still claim benefits on your own earnings record. Of course, your own benefit will be based upon your earnings history.
As you can see, Social Security spousal benefits can be a tricky issue. If you’re the lower-earning spouse of a married couple, a spousal IRA might be a useful tool for you. This retirement fund allows you to save for your own retirement, and provides somewhat of a safety net in the event of a divorce.
Give us a call to discuss these issues in further detail. We can help you learn how to plan for retirement, whether you’re married, divorced, or unsure where you will end up in the future.