A social security statement can be quite helpful. It can tell us, as divorce attorneys many things. It is particularly helpful for couples who are a bit older to help realize the likely available retirement resources for each party as spouses who are closer to retirement age have to more meaningfully consider their financial future into retirement as they often don’t have many years ahead of them to financially recover.
Retirement Benefits:
In order to qualify for retirement benefits, an individual needs 40 credits of work history. A credit is typically earned for each quarter that an individual is employed, thus, an individual employed for ten or more years, typically has sufficient employment history to qualify for retirement benefits.
Earning sufficient credits to qualify for retirement is considered being eligible or fully insured. Even if you have earned sufficient credits to be fully insured, you can continue working and earning credits. The amount needed (the earnings required) to earn a full credit rises in most years. You can research the latest/updated amount required for earning a credit at ssa.gov/benefits/retirement/planner/credits.html.
What is an earnings record? It is an earnings history used to calculate future benefits based on the history of your earnings. There is a limit each year on how much you can earn toward social security benefits based upon the maximum allowable amount. When you earn above the maximum earning amount, it will not appear on your social security earnings record. If you find an error, however, you can reach out to the social security administration and provide documentation to correct inaccuracies. In some cases, earnings will not be countable social security wages. This may include working for federal, state or local government or working in a foreign country. If you earned a pension or other benefit based on excluded social security wages, it could affect the accuracy of your social security statement.
It is important that you consider that the United States Government does not intend for social security wages to be your only source of income in retirement. It is recommended that you plan for retirement with other savings, investments, pensions or retirement accounts to make sure you have sufficient funds to meet you needs in retirement. Your benefit is ultimately calculated based on your highest 35 years of earning history. If you work less than 35 years, you will have the years less than 35 averaged into your work history with zero’s for those missing years. This can obviously significantly reduce your social security wage entitlement in retirement. It is important to work with a knowledgeable and experienced family law attorney who can help you consider how these realities will affect your retirement entitlements and how they should be accounted for through the divorce process. For most people, social security benefits are only intended to replace about 40% of their employment or pre-retirement income.
For most people now, their full retirement age is 67. People can elect to begin receiving benefits before they reach full retirement age (generally as early as age 62) but this will lower the overall benefit that you will receive for the rest of your life. Similarly, by delaying receipt of social security wages past your full retirement age, up until age 70, you can significantly increase the monthly entitlement amount. Given that many people spend twenty years or longer of their life in retirement, it is important that this be carefully planned for, both with a retirement planner, as well as your divorce or family law attorney carefully helping you consider the ramification of these issues on your retirement life where you are changing your marital status, particularly if you are close to retirement age.
Disability Benefits:
In order to qualify for disability payments, an individual needs 20 credit of working history. The 20 credits have to be earned in the past 10 years of work.
Survivor Benefits:
This provides for benefits for your minor or other dependent family members in the event of your untimely death. Eligible family members can receive survivors benefits. These can be paid to your minor children, a spouse carrying for a minor child under age 16 or a disabled child, or a spouse who qualifies for full retirement benefits. Typically there is a total family benefit limit (which will include an amount divided by all minor or dependent children and a dependent spouse, if any). In addition, in the event of your untimely passing, typically your family is entitled to a one-time death benefit. The purpose is supposed to be to pay for death expenses, but for most, the benefit paid is only a couple hundred dollars. If you are entitled to social security benefits, your minor children and spouse will be entitled to benefits as well. If you and your spouse have both earned sufficient credits to be eligible for social security, it is generally best to use the calculator on the social security website to determine whether your benefit can be maximized through seeking benefits under your own, personal work history or the work history of your spouse or former spouse. If you are divorced and were married for ten years or longer, you are eligible to claim benefits under your former spouse’s earning history, provided, however, that you do not remarry. Once you remarry, you are eligible for benefits based on your new spouse’s entitlement.
What about Medicare?
In order to obtain Medicare benefits at age 65, you need to have 40 credits of work. In some instances, if you do not have sufficient credits of work/employment to receive medicare, you are able to purchase medicare entitlement. If you are not sure you qualify, it would be helpful to call your local social security office to discuss your specific circumstances with them. Medicare is the federal health insurance program for people age 65 and older or under 65 with certain eligible disabilities and/or end-stage renal disease (ESRD), meaning permanent kidney failure requiring dialysis or a kidney transplant.
How do you call Medicare? You can reach them at 1-800-MEDICARE (1-800-663-4227).
Does Social Security have Tools Available to Help Me?
Yes! There are many valuable tools that you can find on the social security website. For example, they have a very helpful Life Expectancy calculator that can provide you with a rough estimate of how long you are likely to live. This will be based, in part, on where you live, your age and gender. You can find this tool at ssa.gov/planners/lifeexpectancy.html.
How Can We Help?
At any age, people should consider their ability to retire and where they are at in the planning stage based on their health history/needs, their proximity to retirement and other relevant factors. The reality is, though, that many people who are getting divorced in their 50’s and even into their 60’s are not planning for or considering their opportunity to retire. When this occurs, people are often left post-divorce in an even more difficult and vulnerable position. It is important that you work with a family law attorney who can discuss various options surrounding social security and even, help you evaluate if returning to the work force for a period of time is needed to secure the type of retirement that you want to lead. If you want to discuss this or other unique needs surrounding your divorce, please call Pingel Family Law at (816) 208-8130 today. We will look forward to consulting with you about your situation.