Figures from the Social Security Administration reveal that about one in five married couples in North Carolina and around the country will rely on their Social Security benefits to cover at least 90% of their retirement expenses. Older spouses who are unhappy in their marriages may feel that divorce is not practical because losing their husband or wife’s Social Security benefits would leave them financially vulnerable, but the SSA has rules in place that allow divorcees to receive payments based on their former spouse’s contributions.
This means that even divorcees who have never been employed may receive Social Security benefits. However, these benefits are only available to people who were married for at least a decade and have not remarried. Divorced spouses may begin to receive Social Security benefits at 62 years of age, but the monthly amount will be higher if they wait until they reach their full retirement age.
Divorced spouses can receive 50% of the benefits their former husbands or wives are entitled to, but payments do not usually begin until the party who made Social Security contributions is receiving monthly checks. However, those who have been divorced for two years or longer may receive benefits earlier as long as their former husband or wife is eligible. When divorcees are entitled to Social Security benefits based on their own contributions, the amount they receive is increased by the SSA until it reaches the 50% threshold.
Experienced family law attorneys may explain the SSA rules for clients during an initial divorce consultation, and they could also cover strategies that may avoid taxes and penalties when retirement savings in 401(k) and IRA accounts are divided. When marital estates are complex and these decisions are difficult, attorneys could bring in financial experts or retirement planners to give clients the information they need to make prudent choices.