According to a recent article in the Wall Street Journal, elderly Americans may be missing out on potential source of extra money in their golden years: Social Security benefits from a former spouse. While the difference may not be enormous, it could be critically important to someone on a fixed income.
Though the issue is faced by both men and women, the fact that women typically earn less over their working lives means that they are more likely to be collecting less in benefits then they may be entitled to due to earnings of a former spouse. According to rules issued by the Social Security Administration, an individual is entitled to collect Social Security benefits according to one of three formulas: 1) based on his or her own earnings history; 2) 50% of his or her spouse or former spouse’s benefit if it is greater than their own; or 3) 100% of the former spouse’s benefit if the spouse is deceased.
There are a few stipulations in order for this to apply to divorced couples: 1) the marriage must have lasted 10 years or longer, and 2) the individual seeking a former spouse’s benefit must currently be unmarried, unless the second marriage occurred after the age of 60.
Here’s a good example of when a modification might be needed: your parents were married in the 1950s, your dad worked long, hard hours at the plant while your mom was busy at home raising the kids and working part-time when she had the chance. After years of marriage your parents decided to divorce and now face retirement. Your mother’s Social Security benefit comes to $800 per month while your dad’s stands at $2,000. Rather than continue collecting the $800, your mother is actually entitled to collect $1,000 per month if your dad is still alive and the full $2,000 if he is deceased.
As an added bonus, if the Social Security Administration determines a spouse is eligible for increased benefits, then that person will receive retroactive benefits going back six (6) months.
Source: “When a Divorce Pays Off,” by Ellen E. Schultz, published at WSJ.com.
By Connor Alexander, Law Clerk, Meriwether & Tharp, LLC