You have probably heard this advice numerous times: Don't plan on Social Security for your retirement.
But a nasty recession and an even nastier stock market crash have changed the perception of a lot of people. As investment portfolios cratered from 2007 to 2009, Social Security not only continued to pay benefits, those benefits increased (slightly) because of cost-of-living allowances.
Although the stock market is booming again, lessons have been learned. Instead of minimizing the importance of Social Security, many now understand the importance of maximizing benefits -- or finding benefits they didn't know they were entitled to.
This is particularly true for divorced women. A recent government report concluded that divorce had "pronounced" detrimental effects on the finances of older women in retirement. Additionally, while women have made advances in the workplace over the past 30 years, many nearing retirement saw their 401(k) and investment accounts shrink during the recession.
"So many people lost money, and so many people lost jobs, that the financial world has really changed," says Cindy Hounsell, president of the Women's Institute for a Secure Retirement (WISER), a Washington, D.C.-based nonprofit advocacy organization.
Hounsell says divorced women whose marriage lasted 10 years or longer are eligible to receive Social Security benefits based on their ex-spouse's work record. This is especially helpful for women whose own Social Security benefits are much lower because they worked part-time, spent many years out of the workplace to raise children or their husband was the prime earner. As with many Social Security programs, there are complicated, often head-spinning eligibility rules in addition to the No. 1 requirement that your marriage had to have lasted at least 10 years. Social Security has full eligibility information on spousal benefits for divorced spouses at bit.ly/ss-spousal.
Perhaps the most overlooked benefit for divorced women is survivor benefits if your ex-spouse dies. "It's exactly the same as if you were still married," Hounsell says. "Sometimes, when I mention this at a speech or a workshop, people are astounded." Again, in most cases your marriage had to have lasted at least 10 years, and there are other requirements as well. Social Security has information and eligibility requirements at bit.ly/ss-survivors.
You also can call Social Security at 800-772-1213. WISER has tips on maximizing Social Security and pension benefits for divorced women at bit.ly/wiser-benefits.
And be aware, the rules work the same for men. Depending on the situation, a divorced man may be eligible for spousal and survivor benefits on his ex-wife's Social Security record. It's worth looking into, especially if she earned significantly higher wages.