Social Security and divorce can be complicated. Most Americans take Social Security for granted, yet few really understand the intricacies of how much, when, and to whom social security is paid. Divorce adds yet another layer of complexity.
In a typical married couple situation, generally one spouse has a life-long career and the other spouse has cared for the family and may also have worked for a time. The career spouse is entitled to social security benefits based on contributions over their career. The non-working spouse is also entitled to a benefit equal to half of the career spouse’s benefit or their own benefit (if they contributed to social security) whichever is greater. In divorce, there is no change in benefit for the career spouse, but not so for the non-working spouse.
For a non-working spouse to receive social security benefits based on an ex-spouse’s lifetime earnings, the marriage must have been for 10 or more years. The career ex-spouse must be entitled to social security and both spouses must be over age 62 for the non-working ex-spouse to begin receiving benefits. In addition, in order to receive benefits at age 62, the non-working divorced spouse must be divorced 2 years and not re-married.
The career ex-spouse can get re-married with no implication to his or her own benefit. However, if the non-working spouse remarries, the social security benefit is now based on half the new spouse’s benefit (or the non-working spouse’s benefit if greater). This could result in a much lower benefit. Additionally, should the second marriage end in divorce, and last ten plus years, the non-working spouse can choose the higher benefit: half the benefit of the first or second ex-spouse.
Social security also pays a widow(er)’s benefit even after divorce. The benefit is the full benefit the deceased ex-spouse received (not half). Again, the marriage must have been for at least 10 years and your ex-spouse must have been entitled to a social security benefit. As a recipient, the widow must be 60 years or older (other rules apply if disabled). If the widow re-marries before age 60, the widow’s benefit is lost. However, if the second marriage occurs after age 60, the widow (now re-married) can keep the deceased ex-spouse’s full benefit. This difference between a full payment from the first (deceased) ex-spouse versus half of the second spouse’s benefit could be significant. That is why proper planning is critical for those that have experienced divorce.
There are important choices that need to be made to ensure Social Security benefits are maximized. Only through proper financial planning can an accurate evaluation be made. Oceanic Capital Management LLC specializes in comprehensive planning for those impacted by divorce. Utilizing our expertise and experience we help you navigate the complexities of Social Security and Divorce.