From time to time we are involved in a divorce with an individual or couple who is already receiving Social Security benefits. It is important to consider the affect of spousal support payments on these benefits during your divorce financial planning.
- Social Security Retirement benefits are entitlement based meaning 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 (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 my 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 participants’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.