With the increase in “gray divorce,” we are sometimes involved in cases with an individual or couple who is already receiving Social Security benefits. These benefits are also an important consideration when someone is receiving need-based Supplemental Security Income (SSI). Here’s why.
Social Security Retirement Benefits
Social Security Retirement benefits are entitlement; this means you have to have paid into the system in order to be eligible for benefits. You are ENTITLED to a certain amount of funds in return based up on your contributions while working. These benefits are entitlement based and not subject to reduction based on income from spousal support.
Benefits may be reduced by income from earnings if the recipient is under the normal retirement age when they receive benefits. Benefits may also be reduced for taxes and or Medicare premiums. This can be determined by reviewing the participants pay-stub.
Supplemental Security Income
Supplemental Security Income (SSI), also a Social Security benefit, is a needs-based program which means you must prove you NEED the funds because of limited resources. It is, to our knowledge, reserved for those who did not contribute enough into the system to be eligible for the entitlement-based programs. Supplemental Security Income has income limits for eligibility because it is NEED based. A participant’s eligibility can be affected if they earn over a certain level of income or receive support payments, so it is very important to recognize the difference in your divorce financial planning.
Here is the link to the Social Security Administration web site http://www.socialsecurity.gov/pubs/10069.html#a0=-1 . A Certified Divorce Financial Analyst can help you navigate the many complications of the Social Security programs.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.
Lou Falvo is a Certified Divorce Financial Analyst® and CIMA® (Certified Investment Management Analyst) who assists clients by evaluating the tax and financial aspects of divorce. Lou is dedicated to reducing the burden of each client by thoroughly examining the financial elements of the client’s divorce, with a keen focus on what is in his or her best interests. Contact Lou to find out how he can assist you with your divorce proceedings at lfalvo@crossroadsdivorce.com or (585) 542-2382.