It is important for employed people, as well as their spouses and ex-spouses, to understand Social Security benefits. In 1933, Congress enacted the Social Security Act, which has remained largely unchanged over the years, although the classes of eligible persons have been expanded and the benefit amounts increased. Most recently, Social Security benefits (SSB) were further broadened to include same-sex spouses as eligible recipients.
The rates, ages, and persons eligible to receive SSB have been amended over time, which has led to some unanticipated consequences. Even after the Act was expanded to include female employees who had not been covered under the original language, the assumption remained that most people only married once during their lives, if at all — and that very few people divorced. Current statistics regarding marriage and divorce rates underscore the fact that many Americans now do, in fact, get divorced and remarried, sometimes more than once. The divorce rate is half the rate of marriage. As a result, extending entitlements to divorced spouses has created a pool of recipients far larger than was contemplated in the original Act.
The Act does not reduce coverage of SSB because an employee has had more than one spouse. A single stream of earnings can be the source of multiple SSB streams. For example, a man of 69 may have married in his mid-twenties, gotten divorced in his late thirties after 12 years of marriage, and then remarried in his forties. That man might divorce a second time in his early sixties and remarry again in his mid-sixties. Such a man would have two ex-wives to whom he was married for more than 10 years and one current wife. Each ex-wife, having been married to this man for 10 or more years, is entitled to claim the full 50 percent of her former husband’s SSB (provided she has not remarried). The man’s current wife is also entitled to 50 percent of his SSB entitlements. The total Social Security benefits paid to this man’s ex-spouses and present spouse during his lifetime (and after his death) are thus triple the amount anticipated in 1933.
Social Security benefits are considered entitlements granted by the United States government. They are not assets of an individual or of a married couple. SSB entitlements may be increased, decreased, or eliminated by the government without any recourse by the recipient, who has no right or claim to the receipt of these benefits, currently or in the future. Were a potential beneficiary of SSB to fail to claim timely his or her benefit, it would be lost forever. A year’s — or even a month’s — delay in applying for SSB cannot be rectified; there is no right to receive retroactive payments/entitlements.
Family law attorneys often address the issue of SSB in the context of marriage, divorce, remarriage, and death. A person’s entitlement to receive SSB may be as a result of her earnings or those of her spouse or ex-spouse. However, no person is entitled to claim her own benefits while simultaneously claiming the entitlements of a spouse or ex-spouse, living or dead. A married person, or a divorced person who is not married at the time of seeking benefits but had been married for 10 years or more, may elect to receive her own SSB — if eligible by reason of age (early retirement is currently age 62 and full retirement under the Social Security Act is presently age 66) — or 50 percent of her spouse’s or ex-spouse’s benefits.
Titrating which income stream to claim and at what juncture in time/age can be very financially beneficial. To the extent a claimant delays receipt of his benefit after age 66, such benefit will increase by approximately 5- 7 percent per year. Thus, it may make economic sense for a person who is still working to purposefully delay claiming his SSB until such time as he has attained the age of 70, the end point of any annual percentage increase (assuming annual increases continue for all recipients). In the meantime, any working spouse or ex-spouse is entitled to receive 50 percent of his spouse’s SSB and not tap into his own benefit — allowing it to reach its maximum level under the Act. Upon the death of a spouse or ex-spouse, the amount of the surviving spouse’s (or ex-spouse’s) entitlement jumps to 100 percent of the deceased spouse’s benefit. Once again, a switch of entitlement stream may be wise.
In the context of a divorce or the negotiation of a premarital agreement, neither spouse nor fiancé can legislate that his or her future entitlement to SSB shall be paid or not paid to the intended ex-spouse or intended bride/groom. One has no power to direct the present or future entitlement stream.
Engineering the timing of a divorce or remarriage can be very significant. A divorcing spouse without her own entitlement to SSB should delay, if possible, the entry of the final divorce decree until the 10-year marriage threshold has been met. If one is widowed, and therefore eligible to receive one’s deceased spouse’s benefits, remarriage might be best postponed until after age 60 (assuming the wait is short), as any remarriage after age 60 does not affect a person’s continued receipt of the deceased spouse/ex-spouse’s benefits.
Politicians speak of reducing the age of eligibility for SSB and the monetary amount of SSB. They seldom, if ever, address the unanticipated quirks of the Act that permit numerous persons to claim (and receive contemporaneously) full entitlement to SSB from a single source of earnings.
If you have any questions about the complex provisions of the Social Security Act, or how your marital status may affect your collection of benefits, please contact Donald Tye (dtye@princelobel.com or 617.456.8002) or Nancy Freed (nfreed@princelobel.com or 617.456.8006), co-chairs of Prince Lobel’s Domestic Relations Practice Group; or the author of this alert, Anita W. Robboy (arobboy@princelobel.com or 617.456.8190).
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