For those going through a gray divorce, financial concerns can grow as retirement approaches. People may have planned for retirement with two incomes. They may also depend on shared retirement accounts and Social Security benefits.
Divorce can change those plans. However, benefits through a former spouse’s record may remain available.
How gray divorce can affect retirement income
Several factors can affect whether individuals qualify for Social Security benefits from a former spouse’s earning record. These are:
- Length of the marriage: The marriage generally needs to have lasted a minimum of 10 years. This is required to receive divorced-spouse benefits based on a former spouse’s record.
- Work histories: Benefits are based on the individual’s or the former spouse’s record, whichever is higher. The amounts are not combined.
- Former spouse’s benefit status: If an individual has been divorced for a minimum of two years, they may qualify for benefits based on the former spouse’s record. The former spouse does not need to have filed for benefits yet.
- Remarriage: Remarrying usually ends eligibility for divorced-spouse benefits. However, eligibility may resume after the remarriage ends. Survivor benefits follow different rules. Remarriage at age 60 or older typically does not affect eligibility.
- Timing: The age when an individual claims benefits affects the monthly payout. Divorced-spouse benefits do not increase after full retirement age.It is also important to understand how Social Security differs from retirement accounts. An Indiana court can divide a 401(k) or pension through a Qualified Domestic Relations Order (QDRO). An IRA follows a different process called a transfer incident to divorce. Social Security is a federal benefit that an Indiana court cannot divide. Eligibility depends on federal Social Security rules.
Planning for the future after a gray divorce
Social Security is only one part of a financial plan after a gray divorce. Retirement accounts, property division and daily budgeting also matter. An experienced family law attorney can help clarify what benefits an individual may qualify for. They can also explain how those benefits fit into the overall financial plan.
