You’ve spent much of your life looking forward to a relaxing retirement. And your spouse probably figures prominently in those retirement fantasies. So a divorce in retirement can mark not only a major transition, but a seismic shift in your sense of self. You might feel like your dreams have been thwarted, and maybe even like your life as you know it has ended.
It has. That doesn’t mean you won’t rebuild. You should know, however, that a divorce in retirement can affect your finances in ways that reverberate for the rest of retirement. Here’s what you need to know about how a divorce can affect your Social Security payout.
Your Ex Can Still Ger Social Security
If you divorce in retirement, your ex may be able to claim Social Security through your benefits if he or she meets certain criteria:
- The benefit for which they are eligible from their own work is less than the benefit they would get through your Social Security.
- You were married 10 years or longer.
- You are not married; they can still get the benefit even if they remarry.
- You are over the age of 62.
Your Ex Can’t Take Your Social Security
Social Security recipients sometimes worry that their ex’s ability to receive Social Security through their eligibility will affect their own Social Security payment. Rest assured that it won’t. This is an additional benefit above and beyond your own payment.
The specific amount your former spouse is eligible for is tied to your Social Security payment, which is tied to when you were born, how long you worked, when you retired, and how much you earned. The Social Security Administration will not take into account whether you divorced or how long you were married.
This isn’t something you can fight over in divorce court, since the distribution is based on clear and specific Social Security Administration rules. Don’t waste time and money fighting it. Instead, consider other assets that really matter, and find ways to protect them.
Other Divorce Considerations in Retirement
While your ex can’t take your Social Security payments away from you, he or she may be able to access them in a more indirect way. Depending upon how your state divides up marital assets, if you save Social Security payments in a bank account, it’s possible that your ex could be entitled to some portion of the money in the account. In almost all cases, the court will equitably divide the assets you accumulated during marriage, including your house, cars, possessions, money, retirement accounts, and other assets.
One important consideration is the role of your house in your divorce. It’s likely your most valuable asset, and you might be tempted to let it go. After all, who wants to live in a large home alone? But your house can be a source of emergency money if you need it. Selling it can earn you a tidy profit. A reverse mortgage can also help you access money. You don’t even have to repay the money as long as you remain in your home. So think long and hard before giving up this important asset.
You may also want to consider the role of spousal support. Depending on how much money you each make and how long you were married, you could be forced to pay spousal support—an unanticipated additional expense that may need to factor into your retirement planning. Hire a good lawyer, and your obligation might disappear or be substantially reduced.
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