Learn how Divorce and Social Security can impact your retirement income.

Remarrying and other life changes can add layers of complexity to the process of determining Social Security spousal benefits. Let’s look at a few illustrations.

Divorce settlement negotiations can be contentious if they involve the complex topic of Social Security retirement payments. It’s a massive deal for retirees, especially those who are single or just divorced, and especially crucial for the wealthy elderly. Hence, for the elusive objective of a fair and equitable settlement to be achieved, mediators, divorce financial planners, lawyers, and their clients must understand the role that Social Security plays in a person’s retirement income plan.

For 2023, the highest annual Social Security benefit is $54,660. Very few people receive the maximum. Yet, when the benefit drops, it becomes more of an income. However, the significance of SS allocation is often disregarded in divorce settlement negotiations because state courts need more authority in this area.

How does this function in the real world? For example, consider Brendan and Melissa, a retired couple ages 66. Let’s say both of them have a $2 million net worth, split evenly between your $1.7 million retirement accounts and your $400,000 in cash and other liquid assets. Brendan and Melissa should be able to fairly divide the money by splitting it in half.

How Social Security Came to Be

Workers’ wives were excluded from receiving benefits under the original Social Security Act, which was approved in 1935. Women who did not have a job outside the home were not eligible for Social Security retirement payments back then. In 1939, Congress passed a series of changes that greatly expanded Social Security to cover spouses and children. To be eligible for the first time, a wife’s retirement payout from Social Security had to be either zero or less than half of her husband’s.

According to another reform that reflects the modern world, divorced women whose marriages lasted longer than 20 years now receive retirement payments from Social Security. In the 1970s, the term “spouse” replaced “wife,” making it possible for former husbands to receive retirement benefits on the records of their former wives.

Over time, the requisite years spent married has been lowered from 20 to just 10. Once the Supreme Court upheld same-sex marriage in 2015, same-sex couples were eligible for divorce and survivor benefits.

This concise overview of Social Security’s history demonstrates the program’s gradual but steady development. All former spouses can now collect retirement benefits depending on their former partner’s employment history.

It’s important to note that there are prerequisites before you can proceed. Those who have been married and divorced more than once or whose ex-spouse has passed away may find it difficult to track the restrictions.

Gains for the Separated

If a divorced spouse does not remarry before age 60 and their benefit is less than 50% of their ex-PIA spouse’s, then the divorced spouse will receive 50% of their ex-PIA spouse’s when they file for their benefit at full retirement age or later.

Brendan receives a $3,000 monthly PIA, but Melissa is ineligible for a retirement benefit on her record, so the two of them live in poverty. She must wait until she is 66 to receive her divorced spouse’s benefit. Half of Brendan’s PIA, or $1,500, will be available to her.

Divorcees who use their former spouse’s Social Security number to collect benefits will only see an increase in their payments if they reach full retirement age.

But, if Melissa’s retirement income from Social Security is greater than 50% of Brendan’s, she will only receive her benefit, and the divorce benefit would also be denied to her.

The question of how a chasm in age between a former spouse and themselves can affect benefits is a common one. The good news is that a former spouse’s age does not affect their ability to file a claim. Melissa will receive her full divorce benefit regardless of when Brendan decides to file for retirement, and all she has to do is file at full retirement age.

The Eligible Candidates Are…

One must be legally single to file for benefits based on the record of a former spouse. 

If Melissa has remarried, she may be eligible to receive either 50% of her new husband’s benefit or her own benefit if her own income is higher. So, let’s stick with one Melissa from here on out.

Brendan could be a married man or a bachelor, but it doesn’t matter. If he remarries, Melissa and Brendan’s new wife may be eligible for the 50% spousal benefit.

Let’s pretend Melissa, the 50% beneficiary, remarries. If Melissa remarries, she will only receive half of Brendan’s pension if her new spouse is also eligible for a divorced spouse pension. Unless, of course, the second marriage takes place after age 60.

Melissa could only get Brendan’s Social Security retirement payments if their marriage lasted ten years. Those considering divorce may choose to wait until after the tenth year of marriage is reached to comply with this law. For example, if you’ve been married for 9.5 years, you should hold off for another six months. Divorce proceedings move at such a glacial pace that it’s entirely doable, even without any effort.

Sometimes people forget the exact date they divorced, and the date of the divorce hearing is commonly used as the divorce date. Divorce decrees often take effect on a date after the court hearing. In Massachusetts, for instance, the deadline ranges from 90 to 120 days following the court appearance.

Social Security laws can be challenging to navigate, as should now be obvious. Complications can arise when the retiree also receives a pension, which I’ll discuss in my future piece.