My husband and I are soon to be retired. I have saved in a 401(k) and have pension benefits. He owned a small business for many years, but never created a nest egg for retirement. He is a vet. He may be entitled to more Social Security if he’s single. We thought about divorcing and coexisting to ensure we can make ends meet throughout retirement, but that means placing our modest home in my name only, right?
There is no marriage penalty or limit to benefits paid to a married couple.
And that’s a direct quote from the Social Security Administration website. “A working woman is not limited to one-half of her husband’s Social Security,” the site states. “(That rate applies to women who never worked outside the home.) So, for example, if you are due a Social Security benefit of $1,200 per month and your husband is due a Social Security benefit of $1,400 per month, you will be paid $2,600 per month in retirement benefits.”
There’s no point in getting divorced for monetary reasons, although I’ve heard of people staying together for the health of their finances (joint health insurance policies and lower housing costs). “Since you have a pension when you are married, the spouse gets it as well if you pick the joint life option,” says Cary Carbonaro, a certified financial planner and managing director at United Capital. “If you were not married, you would not get that option.”
What’s more, home ownership is excluded from your qualification for Social Security. “As for your husband’s veteran status, his time in military service can boost his lifetime earnings record as far as calculation of his Social Security benefit, which can result in a higher benefit, but it does not add directly to his monthly check,” says Kimberly Foss, certified financial planner and founder of Empyrion Wealth Management.
That 10-year marriage rule is good for people who actually want to divorce, if you remain unmarried post-divorce and you’re over 62 years of age. “Sometimes, divorced spouses can both claim full spousal benefit and allow their own benefit to grow until age 70,” Foss adds, “but the actual benefit amount varies by age and employment status, so you should do some careful calculation using both married and divorced scenarios and your current data to make sure of which way makes the most financial sense.”
Talking to a financial adviser instead of a divorce lawyer would be far less costly.
Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyist and please include the state where you live (no full names will be used).
Would you like to sign up to an email alert when a new Moneyist column has been published? If so, click on this link.
Hello there, MarketWatchers. Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas: inheritance, wills, divorce, tipping, gifting. I often talk to lawyers, accountants, financial advisers and other experts, in addition to offering my own thoughts. I receive more letters than I could ever answer, so I’ll be bringing all of that guidance — including some you might not see in these columns — to this group. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.