Most Americans probably know that the Social Security Administration sends out annual statements that can assist pre-retirees in estimating their benefits in the future. However, few are aware how divorce and re-marriage can affect those resources and knowing the laws surrounding spousal and survivor benefits can prevent costly mistakes. Social Security is the main source of income for nearly three-quarters of all single retirees, and with a national divorce rate of nearly 50%, (closer to 40% in California) many of those retirees are single because they got a divorce sometime prior to retirement. What almost all of those single retirees do not know is that if they were married for at least 10 years to anyone who paid into the Social Security system, they are entitled to some sort of a spousal benefit. The benefit applies even if they got divorced and does not require the beneficiary to have worked and paid into the system themselves. When the benefits are claimed at full retirement age, the spouse applying will be entitled to as much as 50% of the wage earner’s full benefit amount. If the spouse applying for benefits worked and paid into the Social Security system for at least 10 years on their own, they can also be entitled to benefits on their own work record, but they cannot claim both their own and their spouse’s spousal benefits. They will have to choose one benefit or the other, but they can choose the one that will result in the highest award. When benefits are claimed prior to full retirement age, the amounts will be reduced.
What about if you remarry? When a person remarries before age 60 they lose their right to claim spousal or survivor benefits from a former spouse. However, if they simply postpone remarriage until after age 60, all of the rights to a former spouse’s benefits are kept for life. This means a couple that remarried at age 58 would not be able to claim Social Security spousal benefits based on the records of their former spouses unless they got a divorce and then waited to remarry after they reached age 60, when it would no longer impact their rights to their former spouses benefits. In the case of multiple marriages and divorces, a person might be eligible for benefits based on the earnings records of each of their former spouses, but they can’t apply for more than one. They will have to choose the benefit from the spouse with the maximum Social Security earnings that will provide the most money. It is also important to keep in mind that survivor benefits will equal 100% of the working person’s entitlement while spousal benefits are 50%. This means a person choosing between claiming spousal benefits and survivors benefits can select the one that pays the most. As you approach retirement age as well as when you are going through a divorce, it becomes increasingly important to understand spousal benefits and survivor benefits in order to avoid making mistakes that can cost a lot of money in the long run.