Are you divorced and wondering how Social Security benefits could impact you? Or are you in a married couple considering future financial planning? Understanding the ins and outs of Social Security benefits is crucial for maximizing your financial future, especially when it comes to spousal benefits.
The rules surrounding Social Security benefits can be complex, filled with caveats and nuances. However, there is a valuable quirk for certain divorced spouses that can result in a significant increase in benefits when their former spouse passes away. In many cases, the monthly benefit you can claim based on a former spouse’s work history essentially doubles when they die.
According to Mary Beth Franklin, a certified financial planner and Social Security expert, “Your ex is worth twice as much dead than alive.” This concept can also apply for married couples, assuming the first spouse to die had a larger Social Security retirement benefit than the survivor.
Women in heterosexual couples tend to benefit the most from these rules, as they typically live longer and retire with less wealth. Social Security is considered one of the best financial protections against old age, as it provides a lifetime annuity for retirees.
For married couples, spousal benefits are available, with the lower earner eligible to receive up to 50% of the benefit their spouse is entitled to at full retirement age. Similarly, divorced couples can claim up to half of their ex-spouse’s Social Security benefit, as long as they meet certain criteria such as being divorced for at least two continuous years.
When an ex-spouse dies, the benefit formula changes, allowing surviving ex-spouses to claim up to 100% of the decedent’s benefit. These are known as “survivors benefits.” Remarrying after age 60 won’t affect eligibility for survivors benefits, but remarrying earlier than that could disqualify you.
Understanding these Social Security rules and how they apply to married and divorced spouses can make a significant impact on your financial future. It’s important to consult with a financial planner to ensure you are maximizing your benefits and securing your retirement. Stay informed and plan ahead to protect your financial well-being in old age.
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