In virtually every long-time marriage that results in a Howard County divorce, my client always asks me about the effect of divorce on social security benefits. So, what I am going to try to accomplish is to provide a quick primer on social security and divorce.
This issue comes up with future financial planning upon divorce often. It can affect alimony calculations, and sometimes, when dealing with assets, it is an important consideration.
What do I mean by "long-term marriage?" For a former spouse to be eligible for a share of the other former spouse's Social Security benefits, the married couple must have been married for 10 or more years before their Judgment of Absolute Divorce was entered by the Court. The below scenarios start with this 10 year marriage assumption.
The former spouse's entitlement to social security will be the greater of either (a) 100% or her own benefits, or (b) 50% of the former spouse's benefits. So, if your benefits would be $800 per month, and your former spouse's benefits would be $2400.00 per month, it is a better deal for the lower income spouse to take 50% of the former spouse's $2400.00 per month, which is $1200.00 per month, instead of that spouse's lower $800 per month benefit. Got it?
Now, this is where it gets interesting. If the former spouse who has the higher income dies, the former lower earning spouse will receive 100% of higher income spouse's benefits.
Let's make it even more complicated. If the former lower earning spouse remarries, that spouse will lose the right to claim the former higher earning spouse's benefits. So, be careful about remarriage, and the effect it may have on your future social security benefit, especially if your benefit is modest.
I am going to make it just a tad more complicated. If the new spouse dies or the new spouse and lower earning former spouse divorce each other, the lower earning spouse regains the right to receive first higher earning spouse's benefits.
Confused? Go right to the source, because these rules can change over time!!!