Until the recent U.S. Supreme Court ruling requiring states to recognize same-sex marriages, Social Security was a crapshoot for gay couples. The Social Security Act says that in order for a surviving or former spouse to receive benefits from a worker's record, the state that couple lived in needed to recognized their marriage. So if a same-sex married couple were legally married in one state but lived in a state that didn't recognize their marriage, no spousal benefits could be claimed.
But the recent court ruling changed all that. States are now required to allow same-sex marriage and to recognize those marriages when they occur in other states. And that recognition opens the door to Social Security’s spousal and survivor benefits -- considered to be among the most valuable features of the program.
That's the good news. The bad news is that now same-sex couples can be as confused as heterosexual couples are when it comes to tapping into the SSA. Here are five things everyone should know:
1. For all things Social Security, it pays to be married -- literally.
At your full retirement age, your benefit as a spouse can be equal to one-half of your mate's full retirement amount. Claiming Social Security benefits as a married couple (instead of as two single individuals) can increase additional lifetime benefits significantly -- in some cases, to the tune of $100,000 or more.
2. When your spouse dies, you will be provided for.
There are a ton of rules around claiming survivor benefits, but in a nutshell, if you are married and your spouse dies, you can claim Social Security benefits based on their working record instead of your own. So, if your spouse earned way more than you did, you would be eligible to receive their higher earned benefit for the rest of your life -- which, again, wouldn't be possible if you claimed Social Security as two single individuals. If you and your spouse earn about the same, the impact of this benefit will be minimal. But prior to the Supreme Court ruling, not having your marriage recognized meant no money paid to a survivor.
3. To have loved and lost beats never having loved at all.
Put more directly: Divorce beats never marrying. That's because if you are divorced, you can still collect Social Security benefits from the work record of your ex. Doing this won't impact how much his/her present spouse collects. This only works if you are single though. Once you remarry, this money faucet turns off. To get benefits as an ex-spouse, your marriage must have lasted at least 10 years.
4. Opposite-sex couples may still get more Social Security money than same-sex couples.
Financial Engines recently estimated that the value of spousal and survivor benefits is even larger for heterosexual couples because there are greater age differences among spouses in opposite-sex marriages. These age differences increase the potential values of marriage benefits, especially survivor benefits. Women outlive men and spend more than 11 years on average as widows, according to the Society of Actuaries, so survivor benefits are enormously important to them.
5. Social Security is like a tree trunk with many branches.
Let's start with a principal earner who is eligible for Social Security retirement benefits. A little-known feature of the Social Security system is that in addition to paying retirement benefits for the retired worker, it may provide benefits to the worker's spouse, an ex-spouse if the marriage lasted at least 10 years, and dependent children and grandchildren, depending on the circumstances. Moreover, these benefits can be paid all at the same time.
Anyone have any other pieces of wisdom to share when it comes to Social Security? Please tell us about it in comments.
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