Gay Couple

Photo: Flickr user David Goehring.

The Supreme Court's June decision to legalize same-sex marriage nationwide was an enormous civil-rights victory for same-sex couples across the United States. Now it looks as if it could be a financial victory as well: The Social Security Administration recently made it clear that Social Security benefits will be fully available to same-sex couples. Here's what we know so far and how it could possibly affect the finances of newly married couples.

The SSA has confirmed it
According to a statement on the Social Security Administration's website, the Supreme Court's ruling in the Obergefell v. Hodges case means that same-sex couples will be recognized as married for the purposes of determining eligibility for Social Security benefits. The SSA is currently working with the Department of Justice to fully analyze the court's decision and come up with procedures for processing claims, but it confirmed that couples in newly legalized same-sex marriages will be eligible for full Social Security benefits.

The benefits same-sex couples may be entitled to
Social Security retirement benefits based on your own work record are unaffected by marriage, but same-sex couples could now be entitled to claim survivor and spousal benefits, for which they were previously ineligible, as well as Supplemental Security Income and Medicare.

Survivors' benefits are similar to life insurance in that they are designed to take some of the financial burden off the spouses and children left behind when an income-producing spouse dies. According to the Social Security Administration, the following categories of people can claim survivors' benefits:

  • A widow/widower aged 60 or older (or aged 50 or older if disabled).
  • A widow/widower of any age who hasn't remarried and who cares for the deceased's child under age 16.
  • The deceased's unmarried children under age 18, up to age 19 if still in high school, or 18 and above with a disability that began before age 22.
  • In some cases, a stepchild, grandchild, or step-grandchild of the deceased.
  • Parents who are over age 62 and were dependent on the deceased.
  • A surviving divorced spouse of the deceased, so long as certain conditions are met (the marriage had to last more than 10 years, for example).

Clearly, some Americans in these situations could now be eligible for benefits thanks to the legalization of same-sex marriage. For example, if a 61-year-old in a same-sex marriage loses a spouse, he or she could potentially receive a substantial benefit every month to help ease the financial burden caused by the death -- even though the survivor isn't at full retirement age yet.

Survivors' benefits can be worth quite a bit of money, so this could provide peace of mind for many same-sex couples. The exact benefit amount is based on factors such as relationship to the deceased, how much the deceased would have received had he or she lived to retirement age, and how many total survivors claim benefits based on a single work record. For example, a widow or widower of any age caring for the deceased's young child could receive 75% of that person's full benefit amount, and the child could receive an equal benefit as well.

Spousal benefits are designed to provide retirement income for spouses who either didn't work or earned substantially less money than their spouses.

To illustrate how spousal benefits work, let's consider a hypothetical 66-year-old married couple. One spouse has been the primary earner and has average earnings (adjusted for inflation) of $8,000 per month throughout his or her career. The other spouse worked part-time for most of his or her life and averaged just $1,000 per month.

Using the current Social Security benefit calculation method, the first spouse would be entitled to a monthly benefit of $2,526, and the second would receive $799 based on their own work records. However, since spousal benefits are worth half of the spouse's full benefit amount, the lower-earning spouse would be eligible for a $1,263 monthly benefit -- or 58% more than he or she would receive based on his or her own work record.

It's also worth mentioning that access to spousal benefits opens the door to several benefit-maximizing strategies that couples often use. For example, if both partners reach full retirement age at or around the same time, one partner can claim spousal benefits and delay his or her own benefits until a later date, when they will be more valuable. For some examples of Social Security strategies, check out this article.

Finally, same-sex marriages can now be recognized when determining eligibility and payment amounts for Supplemental Security Income and in determining eligibility for Medicare based on a spouse's work record.

What to do if you might be eligible
If you think you could be eligible for benefits based on your newly legalized same-sex marriage, then the Social Security Administration encourages you to consider applying for benefits as soon as possible, which you can easily do online. Even if it's determined that you don't qualify for benefits, there is no penalty for applying for benefits or appealing a decision, so there's no reason not to try if you think you might be entitled.

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