For Divorcees Nearing Retirement, Social Security Matters
There has been quite a lot written lately about retirees getting divorced. In fact, there’s even a new term being used to describe the phenomenon: “gray divorce.”
From what I am seeing in my own office, it’s true. I’ve been talking with a growing number of people who are getting divorced at ages older than the stereotypical couple separating at mid-life. A number of the people reaching out to me for help ending a stale or even abusive relationship are grandparents now.
Rather than think of this as a sad failure of our culture, as some news articles I’ve read seem to do, I view this as a positive thing. Having a few gray hairs doesn’t mean you should be doomed to an unhappy relationship! People learn about themselves throughout their lives, and making a new start is not something reserved only for the young.
But as with anyone facing a divorce, retirees considering ending their marriage should educate themselves about their rights and potential pitfalls. When it comes to the silver crowd, one of the key issues is Social Security equalization.
Social Security benefits are often a main source - and sometimes the only source - of income in retirement. Yet people often overlook the fact that all of the couple’s resources are available for division in a divorce, including social security benefits.
How are Social Security Benefits Divided in a Divorce?
First, Social Security benefits are not “property.” This is a bit technical, but the basic idea is that the federal government could change your rights to Social Security in the future. What you should know, though, is that this stream of future benefits is not available for division as an asset. Even though the benefits are already earned, they are not treated like a bank account. So, don’t simply ask for a portion of your spouse’s benefits as part of the property division portion of the divorce order. A judge may overlook this important benefit if you do not specifically ask for Social Security equalization as spousal maintenance.
Social Security benefits are available for division as part of spousal maintenance. In fact, the same rules apply for these benefits as for future income. To determine what is fair, the judge will compare your resources, opportunities, health and incomes, as well as the length of your marriage.
For people who have been married 15 years or more and are nearing retirement, this almost always means equalizing Social Security benefits.
How Does It Work?
First, you need to check the box on your complaint indicating that you are seeking spousal maintenance. Did you forget to do that when you filed? Then you will need to file an amended complaint. (If you’re having trouble, I can help. Simply call me.) Second, you need to specifically ask the judge for Social Security equalization. Most judges are not going to do this unless you ask!
Assuming your spouse is the one receiving the higher benefit, you’ll get an order that says your spouse needs to send you a check every month for one-half of the difference in your Social Security benefits. Easy! However, it does not happen automatically - you will need to ask.
Your Benefits or Your Spouse’s?
On another note, you can also choose to receive benefits based on your spouse’s income instead of your own. This is important for spouses who have a history over their lifetimes of earning quite a bit less income than the other party. Also, you can only make this choice if you were married for at least ten years. It is also not available to you if you remarry. Details about the reasons to opt for benefits based on your spouse’s Social Security earnings rather than your own are available here:
For some people, life really does start over in their later years, and this can include getting a divorce. At later stages in life, when most of your earning years are behind you, it is even more important than ever to think about the financial implications of retirement benefits. If your spouse has higher Social Security benefits than you, ask that they be equalized as spousal maintenance.
Need help with your divorce - at any age?
Give me a call. (802) 255-1252
photo credit: Pavel L on Unsplash