The Timing of Your Divorce Could Impact Your Social Security Benefit
The Social Security system permits a divorced person who is eligible for social security benefits to receive the greater of (a) a calculation based on 100% of his/her earned benefit amount, or (b) provided the parties were married for at least ten years, the claimant has not remarried, and the spouse is at least 62 years old, a calculation based on 50% of his/her ex-spouse’s earned benefit amount. This award does not negatively affect the ex-spouse—he/she will still collect 100% of his/her earned benefit.
New Jersey law generally holds that the marital partnership terminates upon a filing for divorce; however, the parties do in fact remain legally married until the subsequent entry of a Judgment of Divorce. For Social Security purposes the latter rule applies—the date of the judgement will be used to calculate benefit awards and adjustments.
What if, for example, a person has been married for 9 years when a divorce complaint is filed? If the divorce judgement issues six months later, neither marital partner can claim the 50% ex-spouse social security benefit because the length of the marriage will be 9.5 years—6 months short of eligibility. In the same way, if a complaint is filed after 9 ½ years with the final judgement issuing 6 months later (to make it 10 years of marriage), either party (if eligible for social security) can apply for the 50% ex-spouse benefit.
Under this social security model a person who would obtain a higher social security benefit using the 50% ex-spouse rule would be wise to delay the entry of a Judgment of Divorce until a full 10 years has passed.
Timing of divorce and approaches to divorce and division of assets can become very complicated. It is important to consult a divorce attorney who is experienced in divorce law and who understands how divorce can affect your income and benefits options for the long term—including those related to income generation after retirement.