Divorce and Social Security

If you’re like most people, you probably don’t think that these two topics are related in any way. Let me briefly explain why they, in fact, are intimately related.

Last week, the Social Security Act turned 88 years old! The original intention was to protect the average citizen from a poverty-ridden old age as well as the family of that individual worker. Unfortunately, over time, it has become clear that more often than not, older women, especially those who are divorced, are living in poverty … as a matter of fact close to 25% of these women as opposed to those women who were never married or are widowed. How is this possible you may ask?

There are several things you need to understand about social security, how it works, and what mistakes to avoid. First, you qualify for social security benefits with 40 credits (4 credits earned every year). The earliest age you can apply is 62. Full retirement age (FRA), which is based on your date of birth, is the next watermark, and 70 is max age for everyone. If you take your benefits anywhere between 62 and your FRA, your benefit will be forever reduced.

So, now let’s talk about how this effects women who are getting divorced. In order to qualify for a spousal benefit, which is up to 50% of the earning spouse’s benefit, you have to be:

  1. at least 62 years of age
  2. have been married at least 10 years
  3. divorced for at least two consecutive years
  4. not remarried
  5. and have an ex-spouse who qualifies for social security

Your individual benefit, if you have one, should be less than what your spousal benefit would be. For example, if your individual benefit is $1,000 and your ex-spouses benefit is $3,000, this means that your spousal benefit could be $1500. In this instance, it makes sense for you to take your spousal benefit . HOWEVER, if you are deciding to take this option and YOU are not at your FRA, the benefit will be reduced because of your age. This will effect your social security benefit permanently. So while your ex-spouse is receiving the full $3,000 you will be forever receiving less than half!

These are things that needs to be considered, analyzed and discussed during any conversation regarding post-divorce income and retirement income. Please listen to the full conversation in the previous post from my appearance on The Divorce Hour with Ilyssa Panitz and call me at 516-234-7522 to discuss your own situation and the decisions that you can make.