People in California who are trying to estimate the effect of a divorce on their retirement should be aware that they might be able to draw Social Security benefits on an ex-spouse's contributions. It is necessary for the marriage to have lasted for 10 years or longer.
It is not necessary for the ex-spouse to have started drawing benefits, but if this is the case, the divorce must have been at least two years ago. A person can start drawing benefits at the age of 62 although this is not full retirement age. For people born in 1960 or later, full retirement age is 67. Benefits will be lower if taken before this age.
Remarrying means the person can no longer draw on the ex-spouse's benefits. However, if the person then divorces, it is possible to start getting the ex-spouse's benefits or to choose between benefits of ex-spouses as long as the other criteria are met. A person can draw as much as half of an ex-spouse's benefit. Eligibility for starting to draw on Social Security benefits may depend on other factors in addition to the person's age, such as whether the person is continuing to work.
Divorce may be particularly hard financially on people who are approaching retirement because they may feel they have little time to replenish their funds. Couples may have created a budget and a plan for retirement, and each person must revise those plans completely with divorce. Assets are supposed to be divided equally in California, but there is still room for negotiation. For example, one person may decide to keep the home, particularly if the mortgage is paid off, and the other may keep a more liquid asset of equal value. A higher-earning party might also be required to pay alimony for several years.