Marital status can have a big impact on your monthly payments.
Think tank proposes capping Social Security benefits at $100,000
A Washington think tank has proposed capping annual Social Security benefits for married couples at $100,000 as a way to reduce a looming deficit in retirement trust funds.
Many retirees rely on Social Security for a significant portion of their income, and married couples may receive higher monthly payments through spousal benefits.
However, only those who are currently married can receive spousal benefits. If you divorce (or become widowed) after you retire, your benefits may change. In some cases, you may be completely disqualified from Social Security. Here’s what retirees need to know.
How benefits change after divorce
If you divorce after retirement, you will no longer receive spousal benefits. However, you may be able to receive divorce benefits instead.
To receive divorce benefits, you and your spouse must have been married for at least 10 years. Similar to spousal benefits, the maximum amount you can receive in divorce benefits is 50% of the amount your spouse would be eligible to receive at full retirement age.
Many divorced spouses can collect the same amount from Social Security by simply switching from spousal benefits to divorce benefits after their marriage ends. However, if you have been married for less than 10 years, you may not be eligible for divorce benefits at all and may lose your spousal benefits.
Remarriage can make Social Security even more complicated.
To receive divorce benefits, you must not be currently married, so if you remarry, you will no longer be eligible for this type of Social Security. However, you can return to receiving spousal benefits based on your new partner’s work history.
However, where things get complicated is the amount you pay. Again, if you use both spousal and divorce benefits together, you can receive up to 50% of your spouse’s or ex-spouse’s full benefit.
Let’s say your ex-spouse receives $3,000 a month when he reaches retirement age. This will give you a divorce benefit of $1,500 per month. If you remarry and your new partner collects $2,000 a month, you will lose your divorce benefit and instead receive spousal benefits of only $1,000 a month.
Additionally, your partner must qualify for Social Security retirement or disability in order to qualify for spousal benefits in the first place. If you remarry and your spouse is no longer eligible for Social Security, you are not eligible to receive spousal benefits or divorce benefits.
What happens if your spouse dies?
If your spouse dies after you begin enrolling in Social Security, you will lose your spousal benefits, but you may be eligible for survivor benefits instead.
The most common recipients of survivor benefits are widows and widowers, but this type of Social Security may also be available to divorced spouses, parents, children, and other family members who were financially dependent on the deceased.
The amount you receive will largely depend on your relationship with that person, but the surviving spouse can often receive 100% of their partner’s benefits.
Social Security can be complicated, especially when there are so many types of benefits with different eligibility requirements. But by knowing which type you fall into, you can maximize your benefits and enjoy a more secure financial future.
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