Divorces among adults near or at retirement age have become much more common in recent years. Property division, financial support obligations and changed living arrangements can all alter retirement budgets. People may also worry about loss of important retirement benefits.
How does divorce typically affect retirement benefits, such as Medicare health coverage and Social Security retirement payments?
Spouses can share benefits
Gray divorces can make people anxious about retirement because they usually need to divide pensions and retirement savings accounts. Under Indiana’s unique approach to property division, any savings people have are potentially subject to division when they divorce.
The end of a marriage often impacts eligibility for employer-sponsored benefits, which may make people feel anxious about losing employment-related benefits. Professionals also earn Medicare and Social Security retirement benefits through years of payroll income tax contributions.
If one spouse only qualifies for benefits based on the employment history of the other or needs the other’s benefits to supplement their own lower benefits, divorce might feel like a risky step. However, there are rules in place to protect older adults who divorce after lengthy marriages.
Provided that a marriage lasts at least 10 years, the spouse who earned less or did not work during the marriage can qualify for Medicare coverage and retirement payments from Social Security based on the employment history of their former spouse. They can even request Social Security retirement benefits to augment the benefits they earned if there is a difference between the two amounts.
Ultimately, dependent former spouses seeking Social Security or Medicare do not typically reduce what a higher-earning former spouse receives.
Understanding how gray divorces can affect retirement benefits is important for financial planning. Older adults often require guidance to ensure they protect themselves financially so that they can still retire comfortably despite divorcing, and that’s okay.