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Social Security retirement benefits after divorce

As many Texas residents may be aware, a divorced spouse may claim a percentage of an ex-spouse's Social Security retirement benefits. Such spousal benefits have specific guidelines, and knowing what they are is important.

In the event that an ex-spouse reaches the normal retirement age, which differs slightly depending on the year a person was born, and begins to receive retirement benefits, the other spouse may apply for spousal benefits. If the ex-spouse did not reach normal retirement age but opted to begin collecting Social Security retirement benefits early, the former spouse may still collect, providing he or she is 62 or older. In such a case, he or she can receive up to 50 percent of the ex-spouse's retirement amount.

The age at which one begins accepting Social Security benefits is important because the monthly amount is reduced if an individual chooses to retire early. The reduced amount is calculated using a formula called the earnings test. In addition, if an individual is still employed when he or she begins to receive benefits, some benefits might be withheld if earnings exceed a certain amount.

For instance, earned income above a certain level will result in a reduced benefit amount of $1 for every $2 earned. If the amount earned was $5,000 above the limit, $2,500 will be withheld. Since spousal benefits are calculated based on the ex-spouse's benefit amount, they are affected by both early retirement and continuing employment. The higher an ex-spouse's income over time, the greater the amount he or she will receive in social security benefits.

In high-asset divorce, retirement benefits may play a significant part in a settlement. A divorce attorney may provide guidance into structuring the settlement to incorporate the addition of spousal benefits upon retirement.

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