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Spousal benefits through Social Security after divorce

Because Social Security benefits are typically not accessible until the retirement years, they may not seem relevant to a Pennsylvania resident who is contemplating divorce. While pensions, 401(k) plans and other retirement assets may be subject to consideration during property division, Social Security issues can be handled apart from the divorce without involving the other party. During one's retirement years, it is possible to claim benefits on a former spouse's account without any impact on that party's own benefits. However, it may be helpful to explore the options prior to making such a claim to ensure that the best possible financial decisions are made.

A former marriage must have lasted for at least 10 years for spousal benefits to be received. If this is the case, the benefit could be obtained at an early retirement age of 62. An individual who will continue to work until or after full retirement age may want to delay such a claim due to a penalty that is imposed when earnings limits are exceeded. The limit is approximately $16,000 for those under the age of 66. Those who have reached full retirement age are permitted to earn nearly $42,000 while claiming spousal benefits before the penalty kicks in.

In deciding when to claim spousal or personal benefits, it is important to compare the amounts. One's personal benefit increases annually by 8 percent when not claimed from age 66 to age 70. At age 70, a personal benefit will no longer increase. By claiming a spousal retirement benefit until this point, it may be possible to maximize one's personal benefit, claiming it at age 70.

In a high asset divorce, an understanding of the financial implications of various retirement benefits could be important because tax penalties may be involved. A lawyer may be able to formulate a reasonable strategy for seeking assets that will pose the least risk of financial penalties during one's retirement years.

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