Social Security: What You Should Know Before You Divorce

Although many of us think about Social Security as a benefit for the elderly, nothing could be further from the truth. If your spouse dies prematurely or becomes disabled, you need to know about Social Security. If you or your spouse is scheduled to pay or receive alimony, you need to know about Social Security. Here are the basics of what you need to know before you divorce.

TERMS AND DEFINITIONS

Here are some of the common Social Security terms with which you need to be familiar:.

Trust Funds: The US Treasury Fund that receives Social Security taxes and pays out benefits and operating costs.

Social Security Taxes: FICA (Federal Insurance Contribution Act) and self-employment taxes.

Worker: Anyone who must pay Social Security taxes on his or her earnings.

Spouse: The husband or wife of a living worker.

Ex-Spouse: The divorced husband or wife of a living worker.

Surviving Spouse: The husband or wife of a deceased worker.

Surviving Ex-Spouse: The divorced husband or wife of a deceased worker.

Work Record: Social Security's record of a worker's earnings that are subject to Social Security taxes.

Work Credit: A mechanism by which Social Security Administration establishes whether a worker has worked enough to be eligible to draw benefits. You must earn a certain number of these credits to be "insured" for Social Security benefits. Workers earn these "quarters of coverage" at the maximum rate of four per year.

Insured: You have earned enough work credits so that you and your dependents or survivors are eligible to draw benefits when other requirements -- such as age or disability -- have been met.

Eligible: You have met all the requirements to draw a particular kind of Social Security benefit, but you have not yet filed an application.

Entitled: You, as an eligible person, have filed an application and benefits have been awarded.

Benefits: Any of the various kinds of Social Security payments that you, your dependents, or your survivors may be entitled to draw.

Beneficiary: Any person who is entitled to any kind of Social Security benefit.

Unreduced Benefit: Generally, the full, maximum amount a Social Security beneficiary can draw at normal retirement age before adjustments are made.

Reduced Benefit: Benefits are most commonly reduced because people draw them before they reach their "normal retirement age."

Normal Retirement Age (NRA): The age at which you are entitled to a full, unreduced benefit. For those of us born before 1938, our NRA is 65.

Early Retirement Age: The earliest age at which you may become entitled to a benefit. For retirees and their spouses, this is 62. For widows, it is 60 unless they are disabled. If you draw at this age, your benefit will be "fully reduced".

Full Reduction: This is the maximum percentage your benefit will be reduced if you draw at your early retirement age.

Annual Earnings Limit: This is the amount of wages or self-employment income you may earn in any year and still get all of Social Security benefits that are due you.

Family Maximum: On any one worker's record, this is the maximum amount of benefits that can be paid to all beneficiaries except divorced spouses over age 62 and surviving divorced spouses over age 60.

Social Security Income: Supplemental Security Income is a benefit program for people who are over 65, blind, or disabled and have very low income and resources.


THE SPOUSE'S AND EX-SPOUSE'S BENEFIT

Since some spouses do not work outside of the home, they do not have insured status with Social Security on their own work records. Other spouses work part-time or at lower wages and therefore do not have enough contributions to secure high Social Security benefits. Just what are the benefits available to the spouse and ex-spouse of a living worker who is drawing retirement or disability benefits, or in some cases to the ex-spouse of a worker who is eligible for, but not drawing, retirement benefits?

When spouses and ex-spouses may qualify for these benefits.

Spouses and ex-spouses may qualify for Social Security benefits if they are 62 years of age or older and, in some instances, if they are under age 62.

I. At age 62 or older, they may be eligible to draw a benefit as either....

the legal spouse of a living worker who is drawing retirement or disability benefits if they have been married for at least 12 months; or

the divorced spouse of a living worker who is drawing retirement or disability benefits. or

the divorced spouse of a living worker who is eligible for, but not drawing, retirement benefits if they have been divorced at least two years. This is called the "independently entitled divorced spouse benefit."

To be eligible as a divorced spouse in either case, 1) you must have been married to the worker 10 full years before the divorce and 2) you must not be remarried when you apply for benefits.

In any of the three cases described above, you will qualify for a spouse's benefit only if your own retirement benefit is less than your benefit as a spouse would be. The divorced spouse's benefit will generally terminate upon remarriage.

II. Under age 62, you may qualify as the legal spouse if you are married to a worker who is drawing benefits and you have in your care a child of the worker who is both....

under age 16 or over age 18 and disabled, and

entitled to Social Security benefits on the same worker's record.

For example, if both the working spouse and a young or disabled child are drawing benefits on the working spouse's work record, as the legal spouse, you can also draw benefits.

This benefit is not available to those who are known as “young divorced spouses” even though one or more children in you care may qualify for benefits.

How is the benefit figured?

If you are over age 62 and a spouse or divorced spouse who has met the requirements described above, then you can......

Start with 1/2 the worker's unreduced benefit;

Subtract your unreduced retirement benefit, if any.

Reduce the remainder according to the age when you are first entitled to payments.

If you are younger than age 62 and a spouse who has met the requirements described, your benefit amount will depend on the number of entitled children involved because of what is known as “the family maximum.”

SUMMARY

At age 62, the spouse of a living worker who is drawing benefits may be entitled to draw a benefit if married for at least 12 months.

At age 62, a divorced spouse of a worker who is drawing benefits may be entitled to draw a benefit if the marriage lasted 10 full years before the divorce and the spouse is not married at the time of application.

At age 62, a divorced spouse of a worker who is eligible for, but is not drawing benefits, may be entitled to draw a benefit if the marriage lasted 10 full years before the divorce, the spouse is not married at the time of application, and the divorce took place at least two years before the application.

In each instance, the benefit -- based on 1/2 of the worker's unreduced benefit -- is reduced if taken before the spouse's nearest retirement age (NRA). If you draw this benefit, the worker’s benefit is not reduced.

Before age 62, a spouse of a worker who is drawing who has a young or disabled child also drawing may be entitled to a benefit that is limited by the family maximum. Drawing this benefit does not reduce the worker's benefit.

BENEFITS FOR CHILDREN

Benefits for children are important when a worker retires, dies, or become disabled.

Social Security Administration’s definition of "child" is important.

For Social Security purposes, a "child" can be the biological child, a step-child, an adopted child, a grandchild under certain circumstances, a child as decreed by a court or as legitimated by the father, or in other ways.

Children may be entitled to draw benefits on the work record of....

a parent who is drawing a worker's retirement or disability benefit; or

a deceased parent; or, rarely,

an entitled or deceased grandparent or great-grandparent.

There are 3 ways a child can qualify for Social Security benefits:

As a minor child, under age 18

As a student if he or she is

between ages 18 and 19, and

a full-time student at the primary or secondary level.

As a disabled child, if he or she

is at least age 18, and

became disabled before age 22.

The same basic disability rules apply for adult children as for disabled workers. Generally, a child must be unmarried to draw benefits...but there are exceptions here too.

An adult disabled child can draw this benefit at any age after age 18. For example, if a child has been mentally retarded since birth -- or has been disabled since an automobile accident at age 16 -- and will be 40 years old when the parent begins drawing retirement at age 62, the disabled adult child can begin to draw this benefit at age 40 because the disability began before age 22.

The amount of a child's benefit

The child's benefit amount will depend on the number of beneficiaries drawing on the same record. But the amount per child can never be more than...

75% of a deceased parent's full unreduced benefit

50% of a living parent's full unreduced benefit

SUMMARY: Children can draw on the work record of a living parent or grandparent who is drawing either retirement or disability benefits. The benefit cannot exceed 75% of the deceased parent's full benefit or 50% of the living parent's full benefit.

If a child becomes disabled before age 22 and is at least 18, the child can collect as a disabled adult child. And don't forget: Social security benefits may also be payable to a disabled child at any age.

BENEFITS FOR THE SURVIVING SPOUSE AND SURVIVING EX-SPOUSE

Almost 20% of all Social Security benefits are paid to survivors. So when a worker dies, besides benefits for children, there are benefits for surviving spouses and divorced spouses. Be sure not to get this information confused with facts about spouses and ex-spouses of living workers.

There are 4 categories of surviving spouses: Two kinds of older spouses and two kinds of younger spouses. And the rules are different.

1) The older legal spouse must have been legally married to the worker for at least 9 months at the time of the worker's death. The 9 month marriage duration rule is waived if the death was accidental.

2) The older divorced spouse must have been legally married to the deceased worker for at least 10 full years before divorce.

In both cases, the older spouse is eligible to draw benefits on the deceased worker's work record at age 60. If, however, the older spouse is disabled, eligibility may begin at age 50.

In both cases, the older spouse must not be remarried unless the remarriage occurs after age 60 (after age 50 if disabled).

This means that marriage after age 60 (50) does not affect entitlement to the benefit.

3) The younger legal spouse was married to the deceased worker at death

4) The younger divorced spouse was divorced at the time of the worker's death.

In both cases, the surviving spouse must be caring for a child who is either younger than 16 or was disabled before age 22 young and who is also entitled to benefits on the deceased worker's record.

In both cases, the child in care must be the natural or adopted child of both the deceased worker and the applicant spouse.

In both cases, the younger spouse is entitled to benefits until the youngest child reaches 16 or so long as the disabled child remains disabled.

In both cases, there is no minimum age and no minimum marriage duration required for the younger spouse to draw.

How are the benefits figured for older surviving spouses?

The older spouse's benefit is a percentage of the deceased worker's unreduced benefit, depending on the surviving spouse's age when benefits are drawn. This benefit will not be less than 71.5% of the worker's unreduced amount, and it generally will not be more than the entitled deceased worker was drawing at death.

Things to remember if you are an older surviving spouse:

If you are age 65 or older when your spouse dies and your spouse was drawing at the time of death, you will receive the same amount as the deceased was drawing. If you are entitled to another benefit, such as retirement on your own work record, you may draw the higher of the two, but not the full amount of both.

If the deceased worker was entitled to higher benefits because he received delayed retirement credits, the surviving spouse will get a higher benefit as well. The amount of the younger spouse's benefit depends on how many others are also drawing benefits on the same record. You benefit amount as a younger surviving spouse can never exceed 75% of the deceased worker's unreduced benefit. It will generally be a share of the family maximum.

SUMMARY: While spouses and ex-spouses of living workers must wait until age 62 to begin drawing benefits, older surviving spouses and ex-spouses of deceased workers can begin to draw at age 60 (age 50 if they are disabled) and there is no age minimum for younger surviving spouses or ex-spouses.

© 1994 Material excepted from “The All You Need To Know About Social Security Video”