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How Divorce Affects Social Security Benefits

divorce-and-social-security-benefitsDuring the divorce process, all community assets, including bank accounts, personal property items, retirement accounts and pension plans need to be equitably divided between spouses. Although Social Security benefits are collected during retirement, they are treated differently from other retirement accounts. In fact, by Federal law Social Security benefits are not considered an asset and cannot be divided in a state court. Many rules affect eligibility for spousal Social Security benefits, i.e. benefits based on the other spouse's work record, so it is important to understand how they work and affect a person’s individual situation.

First of all, if the marriage lasted fewer than 10 years, neither spouse will be able to collect Social Security benefits from the other spouse’s Social Security account. However, if the marriage lasted 10 years or more, Social Security benefits can be collected the same way as if spouses were still married to each other. Two main rules are used first to determine if a spouse qualifies: if the ex-spouse is living, or if he/she is deceased.

If the former spouse is still living, an ex-spouse is eligible for spousal Social Security benefits if these three rules apply:

-  The marriage lasted 10 years or longer
-  The spouse seeking benefits is currently unmarried
-  The spouse seeking benefits is 62 or older and is already receiving benefits

The ex-spouse chooses to collect whichever Social Security benefits are higher, but he/she cannot collect both people’s benefits. A divorced spouse’s benefits are equal to 50% of the other spouse’s full retirement amount and can start immediately if the other spouse has started collecting his/her own Social Security benefits, or two years after the divorce if the other spouse has not started collecting yet. It is important to note that the collection of these benefits is not affected even if the other (receiving) spouse has remarried.

If the former spouse is deceased, an ex-spouse is eligible for spousal Social Security benefits if these rules apply:

-  The marriage lasted 10 years or longer
-  The spouse seeking benefits is 60 or older, or is disabled
-  The spouse’s own Social Security benefits benefit would not be higher than what he/she could claim on the ex-spouse's record

However, it is essential to remember one additional rule that is applied if the other spouse is deceased. If the spouse seeking benefits remarries before the age of 60 (or 50 if disabled), benefits become unavailable. However, if the spouse seeking benefits remarries after age 60 (or 50 if disabled), then spousal Social Security benefits can be collected.

One final and very important rule was established by the Bipartisan Budget Act of 2015.

If the spouse seeking benefits was born before January 2, 1954 and has already reached full retirement age, he/she can decide to receive only the other spouse’s benefit and delay receiving his/her retirement benefit until age 70. However, if the spouse seeking benefits was born on or after January 2, 1954, that option is not available. Filing for one benefit will automatically mean filing for both spousal and his/her own Social Security benefits.

It is good to know that should a spouse claim benefits from their former spouse's account it will NOT reduce the monthly check of the other. It is a huge loophole in the system which Congress refuses to close.

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