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Timing of divorce could have a big impact

When preparing to divorce, many Missouri couples are concerned about the timing. Often, this concern is based on how their children and extended family members will react to the news, or how to avoid a negative impact during the holidays. A far more practical timing issue, exists, however, of which many couples are unaware. For those who are nearing their 10-year anniversary, the timing of divorce could mean a financial benefit of tens of thousands of dollars.

Few spouses are aware that they are entitled to claim Social Security benefits on the work record of a former spouse. In order to do so, the marriage must have lasted for at least 10 years. Spouses who take advantage of this benefit and begin claiming at age 66 can earn a monthly payment that is half of what the former spouse will receive. The benefit can be claimed earlier, at age 62, but doing so will net only 70 percent of what a spouse who waits until age 66 will receive.

This little-known benefit has an even greater value when one considers the ability to delay their own claim while receiving spousal benefits. The amount of one’s ultimate Social Security check climbs over time, and delaying one’s claim until the age of 70 will yield the greatest possible payment. With the proper degree of financial planning, an individual can claim the lower benefit until his or her own benefit has reached the max, then change over to the higher payment.

For those in Missouri who are nearing the 10-year mark, this is an important consideration. Delaying the divorce process can yield a significant financial reward when retirement comes. It can also make a world of difference in one’s Social Security strategy. Spouses should also know that the ability to claim against the work record of a former spouse does not affect the former spouse’s own benefit amount in any way, making this a matter that should not affect the divorce negotiation process.

Source: Time, “How to Collect Social Security Benefits Based on an Ex-Spouse’s Earnings“, Philip Moeller, June 5, 2015