Factoring Social Security into property division choices

For older Utah residents who are preparing to divorce, the decisions made throughout that process have a different weight than those made by couples in their 20s and 30s. Older spouses simply have less time left within the workforce to make up for serious financial losses, and must make property division choices that reflect their goals for retirement. One important aspect of that process is understanding how Social Security benefits will factor into one's budget.

There rules that dictate Social Security are incredibly complex, and many individuals are unsure what their best options are for maximizing this important benefit. For those who are approaching a divorce, the ramifications of securing the best possible Social Security outcome are even more important. One option available to divorced seniors is the right to make a claim against the work record of a former spouse.

If a marriage lasted for at least 10 years and has been over for at least two years, a divorced spouse may be entitled to claim Social Security benefits based on the work record of an ex husband or wife. While this will likely result in a smaller monthly payment at first, the true benefit comes in the ability to defer making one's own claim until they reach or approach their full retirement age. At that point, their payments would be far greater than if they had started claiming years earlier.

When moving through a Utah divorce, spouses should be sure to include these factors into their property division and spousal support negotiations. For a spouse who expects to receive lower Social Security benefits during the first few years of their claim, it may be wise to ask for higher spousal support payments during that period of time, with a reduction in later years. Another strategy would be to negotiate for assets that provide a monthly income, versus focusing on retaining the family home or other forms of property.

Source: PBS Newshour, Why Baby Boomers Are Making the Wrong Social Security Moves, Larry Kotlikoff, Nov. 18, 2013

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