How Does Divorce Affect My Illinois Social Security Benefits?
Glen Ellyn Divorce Attorneys
While the ideal situation is being able to amicably divide your assets upon divorce, that might not always be the case. Even if you are willing to work with your ex-spouse in dividing property and other assets, things can get complicated quickly. During the term of a marriage, property, income, and assets obtained, even if issued in only one person’s name, become “marital property.” Marital property is jointly owned and both individuals are entitled to it upon divorce. So, for example, if spouse A is the only one working during the term of the marriage and is paying into a 401(k) account, spouse B is still entitled to at least a portion of it upon divorce even though spouse B did not contribute to the account. Understanding how divorce may impact your retirement is an important consideration when approaching separation.
What is Social Security?
Social Security is one of the many things taken out of our paychecks at each pay period. A “Social Security tax” is withheld from our pay, making it available to us for use in the future. We pay into the fund throughout our lifetime and become eligible to collect what we paid out upon retirement. Generally, the longer you wait to claim your benefits, the more you will be entitled to receive.
As the law stands right now in the state of Illinois, Social Security taxes earned cannot be “transferred or assigned,” meaning cannot be divided upon divorce. The Illinois Supreme Court will soon tackle a divorce matter in which one spouse paid into their personal Social Security tax and the other had a pension in lieu of the tax. The issue before the court is whether the marital benefits should be affected by the fact that the one spouse’s Social Security benefits cannot be transferred to the other. Essentially, the person with the pension would be losing more in the divorce to “offset” the fact that the Social Security benefits are not available for transfer.
To better understand the possible significance of the case, it is important to understand retirement benefits. A pension is one of many retirement plan options available to certain workers. Since a pension is contributed to by an employer, your employer must offer this benefit for it to be taken advantage of. Though the pension is slowly getting phased out by more flexible retirement plan options such as the 401(k), IRAs, and annuities, pensions remain common in public service jobs and among the older generations today. Being a recipient of a pension upon retirement may prevent a person from being able to collect Social Security benefits at all, and may complicate matters in post-retirement divorce situations such as the one described here.
Social Security, specifically, is unique in that it is a federal program, governed by federal law, with federal spending. We pay now into the fund that is funding the current retired individuals, and younger generations will do the same for us when we become eligible to collect benefits. Other retirement programs are primarily funded in terms of stocks, securities, or paid into by and through your employer. Social Security is a plan designed to supplement other types of retirement income, not to be relied upon alone.
According to the Social Security Administration, divorced individuals that meet certain conditions may be able to receive benefits from their ex-spouse. The conditions are:
- You have been married to that spouse 10 years or longer;
- You are presently unmarried;
- You are 62 or older;
- Your ex-spouse is entitled to benefits; and
- The benefits you would receive from your own work are less than those being awarded to your ex-spouse.
All of these conditions must be met in order to be eligible to collect benefits from an ex-spouse upon retirement. If you remarry, you may no longer be eligible to obtain Social Security benefits from your ex-spouse. If your ex-spouse has not filed for benefits yet, you may still be eligible to receive them.
Glen Ellyn Family Law Attorneys
Retirement is not usually the first thing on your mind in an emotionally-charged divorce. Nor is it something that most people are thinking of when the consequences will not be apparent for years down the line. However, understanding your rights and what you (and your spouse) are entitled to in property division during divorce is critical to your financial security in the future. At Mulyk Laho Law, LLC, our DuPage County family law attorneys have the experience necessary to help you understand your rights in a divorce. We aim to help individuals reach amicable resolutions in their divorce settlements and will always keep your best interests and future in mind. If you or anyone you know is seeking counsel for a divorce, contact our Glen Ellyn office today at (630) 852-1100 and learn more about your legal rights.