Gray divorce can raise financial questions that may not come up in a divorce earlier in life. When you are close to retirement, Social Security may make up part of your future income. However, these benefits do not work like a bank account or retirement fund that can be split between spouses. Instead, Social Security rules may affect how you look at the full value of a divorce settlement.
How Social Security benefits work after divorce
Social Security benefits usually stay tied to the person who earned them. Still, a divorced spouse may qualify for benefits based on an ex-spouse’s work record if certain rules apply.
For example, a former spouse who was married for at least 10 years, is at least 62 and remains unmarried may qualify for divorced-spouse benefits if the ex-spouse qualifies for Social Security retirement or disability benefits. The former spouse may receive up to 50% of the worker’s full retirement age benefit without reducing the worker’s benefit.
These rules can make Social Security an important part of looking at different settlement options. The value of other assets may matter more when one spouse has a stronger Social Security benefit than the other.
What to consider during property division
Social Security benefits generally do not get divided during divorce. However, future Social Security income may still affect how you view other assets. For example, one spouse may have a larger Social Security benefit while the other may have more money in a 401(k) or pension.
Several factors may matter when looking at the full financial picture:
- Each spouse’s Social Security work history
- Each spouse’s estimated Social Security benefit
- Each spouse’s eligibility for divorced-spouse benefits
- Each spouse’s other sources of retirement income
- The value of the assets included in the settlement
Looking at these details together can show how a proposed settlement may affect your income during retirement. Legal assistance may also help you review how Social Security rules and property division can work together in a divorce agreement.
Planning for the years ahead
For couples divorcing later in life, focusing only on the value of current assets may leave out future income. Considering Social Security along with retirement accounts, pensions and other assets can give you a better view of your financial outlook.
Since Social Security rules and state divorce laws cover different issues, discussing your situation with a qualified legal professional may help identify factors that could affect your settlement.
