Page 44 - Investment Advisor - December 2021

Conclusions

RETIREMENT PLANNING
By Marcia Mantell

Husband Walks Out on Wife. Complexities Abound,

Especially Around Social Security Benefits

The ex-wife is 10 years older and has to go back to work. And now she
wants to remarry!

e get married thinking lates her benefit each year she works.
we will have a wonder- If her current wages are higher than
W ful life. Some couples do, those used to calculate her Primary
but others find themselves in difficult Insurance Amount (PIA), her ben-
situations. Regardless of a client’s efit amount would increase.
marital situation, a common thread is
that Social Security decisions from one WHAT CAN SHE GET ON HER EX’S
spouse can have dramatic implications WORK RECORD?
on the other. Add in a divorce and the Tammy’s next question was about options
rules get more complicated. for claiming on her ex. She’ll be 70 in 2022
In the case of “Tammy,” who wrote to and is unhappy that she’s still receiving a
me recently, her financial life was turned reduced benefit that is further shrunk
upside down when her husband of 32 years by Medicare Part B premiums. Tammy
suddenly left and froze their accounts. heard she might be eligible for additional
Just months before turning 62, Tammy’s benefits on her ex’s record once she’s 70.
husband, 10 years younger, left their house She provided little information, so
and never returned. She found out quickly this was a situation of connecting the
that their credit cards had been canceled dots in reverse. First, estimating her
and the bank account emptied. This was PIA is important to see if she’ll have any
a shock to Tammy. She had retired a year options as an ex-spouse:
earlier and now had no income. She knew • She said her reduced benefit is
she could access Social Security at age 62 “about $850” per month.
and needed to tap her benefits early. Medicare when she’s receiving benefits. • Based on her current age, her birth
It took well over a year for the divorce As long as Tammy earns wages at a cov- year is 1952, so FRA is 66.
to settle. By age 65, she was barely hang- ered employer, the employer is required • Claiming at 62 means a full 25%
ing on financially and decided working to pay FICA taxes. There is no exemption reduction.
full time was necessary. Today, she’s 69 when working and collecting benefits. • Backing into her PIA results is about
and still working. Since reaching her full retirement age $1,130 per month.
(FRA) in 2018, she can earn any amount
PAYING INTO SOCIAL SECURITY of income and still receive her reduced NEXT, CONSIDER THE DIVORCE RULES Jim Frazier/theispot.com
WHEN RECEIVING BENEFITS benefit with no clawbacks, though pay- There are five major Social Security
Tammy’s first question was why she roll taxes reduce her paycheck. rules for divorced people. First, the exes
had to keep paying Social Security and Furthermore, Social Security recalcu- must have been married for 10 consecu-

42 INVESTMENT ADVISOR DECEMBER 2021 | ThinkAdvisor.com