How Social Security Benefits Are Affected by Divorce
Social Security benefits may be a major concern for people in New Jersey planning to divorce. One of the fastest-growing segments of the divorced population includes people over 50 seeking a “gray divorce,” for whom the effects of divorce on Social Security may be an even more pressing concern. While the rules may be confusing, it can be important to understand the best available benefits in order to protect your interests and financial future during and after divorce.
Understanding Divorce and Social Security
“Gray divorce” has grown rapidly in the past several decades. While divorce rates have dropped for younger couples choosing to marry, they have grown for people 50 and up, bucking the overall trend in New Jersey and across the United States. The financial consequences of divorce are often a greater concern for older couples, as both parties may have less time to recoup losses or engage in escalated savings plans to prepare for retirement. This means that any effects of the divorce on Social Security benefits, positive or negative, are particularly important for people ending their marriages later in life.
Your family law attorney can help you to understand how your divorce may affect your Social Security benefits. You may be able to claim benefits in several different ways, even if you will not be able to access those benefits for decades after your marital settlement agreement is signed and the divorce is finalized. In most cases, the Social Security Administration itself will not necessarily advise you about the most advantageous way to pursue your benefits. Therefore, it is important to get your own information and understand which options are available to you.
Can You Claim Benefits on Your Ex-Spouse’s Work Record?
In some cases, one party may have significantly lower Social Security benefits projected for the future, especially if that spouse was a stay-at-home parent or a homemaker. However, you may benefit from provisions of Social Security that allow you to access benefits from a former spouse’s account, without negatively impacting your ex-spouse’s own entitlement to benefits. Because Social Security benefits are managed by the government, they are often not explicitly included in a divorce agreement. However, your family lawyer can advise you about how to include Social Security in your post-divorce financial planning.
In order to receive Social Security benefits based on the work record of your former spouse, there are several requirements:
- The marriage must have lasted for 10 years or longer
- You must be unmarried when making the claim for benefits
- You must be older than 62 when making the claim
- Your own Social Security benefits based on your work records would be less than those based on your former spouse’s work record
If your former spouse has not yet applied for Social Security but is eligible based on age, you can apply on the basis of their record so long as you have been divorced for at least 2 years when applying. This policy has strong positives for many people because it does not in any way diminish the benefits your former spouse receives. Their choice to remarry also does not affect your eligibility. A divorce lawyer may also advise you about how choosing to remarry or, in some cases, cohabitate after your divorce could affect your claim.
You can claim either your own benefit or the equivalent of half of your former spouse’s benefit at Full Retirement Age, which is 67 for people born after 1959. In general, the Social Security Administration will pay the amount of your own benefit and will “top up” your monthly benefit based on your ex-spouse’s benefit, up to half of your ex-spouse’s benefit. (Of course, if your benefits from your work record are greater than half of your former spouse’s benefit, there is no reason to claim against their account.) A divorce attorney or a financial adviser may help you to understand the different options available to you when dealing with Social Security.
Remarriage invalidates your ability to apply based on your former spouse’s benefits; this is one reason why many divorced people choose not to remarry later in life. Defined benefit pensions and other such plans may also contain provisions for former spouses or survivors that could be affected by remarriage; you may wish to consult with a family law attorney if you are considering remarriage at an older age while receiving benefits of any kind based on your former marriage.
Survivor’s Benefits After a Divorce
Widows and widowers are entitled to survivor’s benefits from Social Security if a worker dies. So long as you were married for 10 years or more before you divorce, you can claim the same benefits as if you were your former spouse’s current widow or widower, even if they have remarried. Your benefits as a former spouse will not affect anyone else’s entitlement to survivor’s benefits, like a current spouse or children. Even if you have been divorced for some time, a family lawyer or Social Security adviser may help you to understand your options following the death of your former spouse.
Unlike accessing your former spouse’s benefits based on work record, survivor’s benefits are independent of your own individual Social Security benefits. You can switch back and forth between receiving your individual benefits or survivor benefits, depending on which one is greater. You can claim these benefits as early as age 60 rather than waiting until retirement age, and survivor benefits are worth 100% of what your former spouse collected or was entitled to at the time of their death.
So long as you waited until after age 60 to marry, you can still collect survivor benefits if you have remarried following your divorce. This form of benefits provides greater flexibility than other post-divorce Social Security options, as survivor benefits and work record benefits are two different programs. A family lawyer may advise you about which choices may be the most financially beneficial.
Additional Social Security Guidelines
In general, the same rules that apply to collecting your own Social Security benefits also apply to collecting those tied to a former spouse following a divorce. If you take benefits before your full retirement age, typically 67, you will be subjected to restrictions on your ongoing work. The earnings cap for 2021 is $18,960, but it is adjusted based on the cost of living. However, benefits adjusted due to the earnings cap are not permanently lost, because your benefit will be recalculated after you reach your full retirement age.
On the other hand, if you begin collecting benefits before age 67, your benefits will be permanently reduced. This reduction will apply whether you are taking benefits on your own work record, that of your former spouse or as a surviving former spouse.
You can also increase your monthly benefit by delaying the beginning of your Social Security collection until after your full retirement age. They increase by 8% per year up to age 70, called a delayed retirement credit. Delayed retirement credits are not applicable to survivor benefits, however, because those benefits are locked in place at the time of the former spouse’s death. Once you reach your full retirement age, there is no reason to delay claiming any survivor benefits to which you are entitled.
You may consult with a divorce lawyer if you have been married and divorced more than once, especially if each of those marriages lasted for 10 years or longer. You may consider which former spouse’s work record has a larger benefit and make that claim based on the results. In some cases, multiple former spouses make an equal claim on one person’s work record. Because none of these claimants’ benefits are reduced as a result, there is no reason to avoid claiming the most advantageous option for your personal finances.
Social Security and Divorce Later in Life
If you are considering how divorce may affect your Social Security entitlement, a divorce attorney may provide advice and guidance. Contact the experienced New Jersey family lawyers at Lawrence Law by calling 908-645-1000 or using our online form for a consultation about divorce negotiations at our Red Bank or Watchung, New Jersey, office.