3 Social Security Tips for LGBT Couples
By: Robert Castillo, ADPA®
As a gay Financial Advisor, I’ve focused my business on helping the LGBT community and one thing I’ve noticed about same-sex couples is that they rarely communicate about finances, which often leads to unnecessary stress and problems down the line. Don’t be a statistic: plan early! Couples have a lot to consider as they can now benefit from over 1100 federal benefits allotted to spouses. Social Security is one of the first topics my retiring clients want to discuss, so I would like to highlight three talking points that apply to all married couples. Remember: in order to truly create a thorough financial plan, the best course of action is to meet with a financial planner to discuss the most appropriate strategies for your situation.
1) Some Basics on Social Security
You can apply for Social Security benefits as early as age 62 but expect to get a reduced payment. Each year that you wait to receive benefits, they increase by 8% until age 70. Keep in mind though, Social Security is designed to pay you a specific amount of money over your lifetime, which is based on your reported income and the number of years you’ve been working and paying Social Security taxes. The optimal age to collect Social Security benefits is around 66 or 67 depending on when you were born, this is known as FRA or full retirement age. FRA is when you are supposed to collect Social Security benefits; collecting before or after FRA will result in a reduction or credit to your benefits. All this matters to spouses even more because they can choose to collect benefits on each other’s work history, so it is important to do some planning when receiving Social Security.
2) Unmarried couples qualify for spousal Social Security benefits if they are state registered domestic partners
If you are in a relationship and are not married, you can register with your state as domestic partners and qualify for spousal social security benefits. In my state of California, domestic partners must file a Declaration of Domestic Partnership with the Secretary of State. Spousal social security benefits are especially important for couples if one partner has little to no work history. A partner with no social security history could claim a spousal benefit of 50% of their partner’s benefits. It is important to note that a state will not recognize any spousal rights if they do not grant same-sex couples the right to a civil union or a domestic partnership. Moreover, not all couples may register as domestic partners, you must be in a same-sex relationship or be age 62 or greater.
3) You can claim spousal Social Security benefits even if you are no longer married
If you separate from your spouse, then you can still claim a spousal Social Security benefit if you were married for at least ten years. However, you must stay unmarried to be able to claim the benefit. There is an exception to this rule if your ex-spouse is deceased and you are age 60 or greater. This is one reason domestic partnerships are an option for people age 62 or greater in case one partner in a relationship is currently receiving benefits based on an ex-spouse’s work history. Instead of getting married and losing social security benefits, two people age 62 or greater can register as domestic partnerships and gain other state benefits and protections in the process.
There are many other aspects to planning for how to receive your social security but the process starts with meeting with a financial advisor who will walk you through the process of creating a profile on the administration’s website, www.ssa.gov . Whether you are wondering if you should wait to take your benefits or would like to know how much income you may earn while still receiving benefits, your first stop is to speak to a professional so that you can make the best choices possible.
Robert Castillo, ADPA® is a Financial Advisor at Santa Monica, CA based Gerber Kawasaki, an independent investment advisory and wealth management firm where the advisors collectively manage over $656 million in assets. Robert is also an accredited domestic partnership advisor and has been specializing in financial planning for LGBT same-sex and unmarried couples since 2009. To contact Robert, please email him at Robert@GerberKawasaki.com Twitter: @RCastilloLA
Disclaimer: This article contains general information and is not intended as legal or tax advice. Every case must be reviewed independently with an attorney or tax advisor.
Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor. Securities offered through LPL Financial, Member FINRA/SIPC