The Social Security Administration (SSA) recently announced a significant change that will impact retirees’ Social Security benefits, especially for those who are divorced or going through a divorce. This change involves using Social Security benefits as income for spousal support (alimony).
Understanding how these changes affect retirees is crucial for anyone dealing with divorce. This article explains how alimony affects Social Security benefits and what retirees need to know.
How Does Alimony Affect Retirees and Their Social Security Benefits?
Different State Laws on Alimony
Every state has its own laws about alimony. Generally, alimony is financial support one spouse gives to the other after a divorce. It can be requested during the divorce process, often mentioned in the divorce petition. Alimony can be decided in different ways: through a settlement agreement between the spouses, mediation, or a court decision by a judge.
Types of Alimony
Temporary alimony is usually given after issues like child support, child custody, and property division are settled. It can also be awarded early in the divorce process to support the non-earning spouse before the divorce is finalized. The purpose of alimony is to help the spouse with less income, often because they took care of the home and children, while the other spouse earned more.
Social Security Benefits and Alimony
In the past, Social Security benefits were not considered for alimony. However, new court rules now allow Social Security benefits to be counted as income for alimony purposes. This means judges can consider Social Security retirement benefits when determining alimony or child support. Even though Social Security benefits are generally not transferable, they can now influence alimony decisions.
Financial Experts Disagree with the New Alimony Measure
Concerns of Seniors
Financial expert Kevin Thompson, founder and CEO of 9i Capital Group, notes that many seniors are concerned about this new alimony measure. According to the SSA, an ex-spouse can be eligible for benefits on your record if you were married for at least ten years before your divorce. This means that older Americans who have been married for a long time may see their retirement benefits reduced due to their ex-spouse’s claims.
Impact on Divorce Settlements
Alex Beene, another financial expert, explains that even if there is a significant income difference between former spouses, including Social Security benefits in alimony calculations could reduce the amount of alimony. This new rule could significantly impact divorce settlements, requiring couples to carefully consider their options and how alimony calculations will affect their benefits.
All We Know
The recent change by the SSA to include Social Security benefits in alimony calculations will impact many retirees. The new rule aims to provide fairer financial support during and after divorce. However, it also raises concerns about the financial stability of seniors who rely on these benefits.
Financial experts are divided on this issue, with some worrying about the negative impact on seniors’ financial well-being. Retirees and those going through a divorce need to understand these changes and how they might affect their finances.
FAQs
What is the new Social Security change?
The SSA now allows Social Security benefits to be considered as income for spousal support (alimony) calculations.
How does this affect retirees?
Retirees may see their Social Security benefits used in alimony decisions, potentially reducing their overall benefits.
Who is eligible for alimony?
Alimony can be requested during divorce proceedings and is usually granted to the spouse with lower income, especially if they took care of the home and children.
Are all states affected by this change?
Yes, all states must follow the new rule to include Social Security benefits in alimony calculations.
What should retirees do?
Retirees should consult with financial experts and legal advisors to understand how this change affects their benefits and financial situation.