Alimony and Social Security: Legal Considerations
Alimony is generally paid to an ex-spouse after a divorce when there is a significant income disparity between the partners.
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The case centered on a federal law provision stating that Social Security benefits cannot be “transferable” or “assignable.”
Social Security as Income
However, another provision indicates that Social Security benefits are considered income for alimony payments.
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Judge David H. Yun stated that judges may “consider Social Security retirement benefits, as well as other non-assignable federal benefits, in awarding maintenance or child support, even in circumstances where the order effectively results in an indirect assignment of those benefits.”
The Role of Alimony
Historically, alimony has been provided to ex-partners with a substantial income gap to ensure the higher earner supports the lower earner post-divorce.
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Often, the lower earners sacrificed their careers to care for children or manage the household in non-monetary ways.
Colorado Case: Social Security Benefits Affecting Alimony Adjustments
In this specific Colorado case, Riley McClure was paying his ex-wife $2,500 monthly in alimony.
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After McClure retired and began receiving Social Security benefits, he sought to reduce his alimony payments but was required to use his Social Security benefits for spousal maintenance.
Social Security Income Can Be Included in Alimony Calculations
McClure argued this requirement violated federal law.
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However, the Court of Appeals ruled it permissible to include Social Security income in calculating the financial obligations of one spouse to another post-divorce.
Expert Insight
Alex Beene, a financial literacy instructor at the University of Tennessee at Martin made a statement to Newsweek.
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“While it may be surprising to some, past legal decisions have at least partially supported the idea of Social Security being used as a means for making alimony payments. This is especially true in situations where a Judge feels an ex-spouse should continue to make payments, but because they qualify for Social Security, the amount of those payments is reduced.”
Alimony Ruling Unlikely to Impact Most Seniors
Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, mentioned that for most seniors, the alimony ruling is a non-issue.
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He explained that the majority of seniors won’t be significantly affected by this decision.
Social Security Benefits for Ex-Spouses of Long-Term Marriages
According to the Social Security Administration, if a marriage lasted at least 10 years before divorce, the ex-spouse may qualify to receive benefits.
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These benefits would be based on the other spouse’s record.
Impact of Marriage Duration
“Most seniors have likely been with their spouses longer than 10 years, and their Social Security spousal benefit may offset any demands on their retirement benefits,” Thompson told Newsweek.
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“This may impact seniors, possibly in the sense of separation versus actual divorce. I could foresee seniors where this may impact, actually filing for separations versus outright divorce, to attain the number of years necessary as to not impact their Social Security benefits.”
Income Gap and Social Security Impact
Beene noted that if there’s a significant income gap between former spouses, there would likely still be a reduction in the alimony payment.
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This applies even with a notable change in monthly income, including Social Security.
Potential Challenges to Social Security and Alimony Rulings Amid Rising Inflation
“At the same point, rulings like this will more than likely be challenged,” Beene added.
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“As seniors deal with the rising costs of inflation, a case could be made to protect Social Security benefits in full, regardless of alimony or similar payments.”