Social Security Considerations for Divorced Women

As part of our Thriving After Divorce Speaker Series, our own Leah Hadley, Founder and CEO of Intentional Divorce Solutions and Intentional Wealth Partners, discussed Social Security Considerations for Divorced Women.

Social security is a very important topic, especially for women who have been divorced (whether or not you're now remarried) and are approaching retirement age. Women represent 56 percent of all Social Security beneficiaries aged 62 and older and about 66 percent of all beneficiaries aged 85 and older. 

Even though progress has been made in bridging the gender pay gap, on average, women still earn less than men and have less retirement savings. BUT on average, women are LIVING LONGER than men, so how can you maximize the money you have so you can live the way you want in your retirement?

In Leah's presentation, she discussed the value of Social Security and the ways you may increase your lifetime benefits.

The Value of Social Security

First, Social Security is one of the few sources of income that continues until you die. And, of course, the longer you live, the more you will extract from the system.

If your benefit starts at $2,000 per month, and if you live 10 more years, you will receive nearly $300,000 in lifetime benefits. If you live 20 more years you'll receive over $600,000 in lifetime benefits. And if you live 30 more years, you'll receive over $1 million over your lifetime. This assumes annual cost-of-living adjustments (COLAs) of 2%.

Second, Social Security offers annual inflation adjustments. So if your benefit starts out at $2,000 per month, and if annual COLAs are 2%, in 10 years you will be receiving $2,438 per month. In 20 years your benefit will be $2,972, and in 30 years your check will be $3,623.

Because you might be entitled to more than one Social Security benefit, here are some questions to ask.

  • Do you qualify for benefits on your own work record? If you paid into Social Security for at least ten years, then you do. The ten years do not have to be consecutive.
  • Are you currently married? Has your husband started his Social Security benefit?
  • Have there been any prior marriages? If so, and if you meet the requirements, you may qualify for benefits on a former husband's work record.

Depending on your answers to these questions, you could be entitled to one or more of the following: Retirement benefits, spousal benefits, divorced-spouse benefits, or survivor benefits. How you coordinate all these benefits is crucial in determining your overall Social Security income.

Retirement Benefits

Here is a brief description of each of the possible benefits.

Personal Benefit

If you worked for at least 10 years in a job that paid into Social Security, you will be entitled to a retirement benefit. If you apply for your Social Security retirement benefit before full retirement age, you will receive a percentage of your Primary Insurance Amount (PIA). If you apply for Social Security after your full retirement age, your benefit will go up by 8% for each year you delay. You can find your full retirement age here.

Spousal Benefits

When Social Security was first instituted in 1935, most women didn't work outside the home. So the system allows for spousal benefits to be paid where a woman can draw Social Security off her husband's work record. Today many women qualify for a retirement benefit on their own work record. But you still may be able to take advantage of spousal benefits. And because Social Security is gender-neutral, men can sometimes take advantage of spousal benefits too.

Divorced-Spouse Benefits

If you were married over 10 years to the same husband and are currently unmarried, and if your ex-husband is at least 62, you may be entitled to a divorced-spouse benefit. If the divorce occurred more than 2 years ago, he does not need to have filed for his own benefit. He only needs to be 62.

Survivor Benefits

At some point in your life, you may become eligible for a survivor benefit. If that survivor benefit is higher than the benefit you are receiving at the time of your husband's or ex-husband's death, you can switch to the higher benefit. So even though it may be a long way off, you need to understand how survivor benefits work, because certain decisions made now can affect the amount of that benefit.

Social Security and Remarriage

If you're divorced or widowed and thinking about remarrying, keep these rules in mind.

  • If you remarry at any age, you can't receive divorced-spouse benefits. So if you're already receiving divorced-spouse benefits and thinking about remarrying, understand that your divorced-spouse benefit will stop. However, you may be able to get spousal benefits based on your new husband's work record.
  • If you remarry before age 60 you can't get divorced-spouse survivor benefits on your former spouse's record.
  • If you remarry after age 60, you can still get survivor benefits or divorced-spouse survivor benefits.

The rules and details about Social Security and the different scenarios are complex and can be difficult to understand. If you have questions, you can always ask us or call the Social Security Administration. 

We can also provide you with a Social Security Analysis as part of an overall financial plan. If you'd like to schedule a complimentary consultation to learn more about our services, please click here to schedule.