On behalf of The Law Offices of Mary Ann Beaty, PC posted in Divorce on Friday, December 23, 2016.
The end of a marriage involves an almost infinite number of financial matters involving pensions, homes and savings accounts. Divorce issues also include planning for other matters that are instrumental for future financial security, such as Social Security.
The average retired worker will receive $1,360 each month in Social Security benefits in 2017. This payment is usually based on a worker’s record and the accumulation of 40 work credits or 10 years of work. But, a person can also receive these benefits based on a former spouse’s work record, when these benefits are higher than the benefits that the spouse would receive.
A spouse or ex-spouse can receive a permanently reduced spousal benefit when they reach 62. The spouse must be unmarried, at least 62, have a former spouse entitled to Social Security retirement or disability benefits and the entitled benefit based on a work record is less than the benefits based on the former spouse’s work.
They can also receive up to 50 percent of the spouse or ex-spouse’s retirement benefits when they wait until full retirement age before claiming these benefits. Remarriage usually prevents access to these benefits based on a former spouse’s work record, unless the remarriage also ended by divorce, death or annulment.
A spouse’s benefits are not lowered when their former spouse claims benefits based on the spouse’s work record. A former spouse who claims benefits who is younger than retirement age and has a higher income may have some benefits withheld. The Social Security Administration will withhold $1 for every $2 earned above $16,920 in 2017. Benefits withheld in 2017 under this limit will be added to benefits paid after full retirement age.
This may require some planning, however, because Social Security benefits may be taxed. Single individuals who have adjusted incomes over $25,000 in 2017 must pay taxes on some of their Social Security income. Generally, an individual should add half of their Social Security income to their other income when calculating these taxes.
An attorney can help plan for numerous divorce legal issues and seek a settlement that takes financial needs into consideration. Legal representation can help assure that property division and other financial decisions are fair and reasonable
Source: The Motley Fool, “Your 2017 guide to Social Security and divorce,” Todd Campbell, Dec. 15, 2016