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By Suzanne Blake
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Those receiving Social Security could see their alimony figures change after a state court ruled the benefits can be calculated as income for spousal support.
The Colorado Court of Appeals ruled earlier this month that the federal law does mean Social Security can be used as income in deciding what sort of alimony one ex-spouse owes to another.
Ex-spouses are often court-ordered to pay alimony if their spouse made a significantly lower income. This can protect stay-at-home parents in cases where one spouse sacrificed their career to take care of the children or otherwise supported their spouse in their financial pursuits.
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The appeals court was examining a specific provision of federal law that rules Social Security payments can't be "transferable" or "assignable."
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Colorado retiree Riley McClure and his legal defense argued that Social Security should not be used to calculate alimony paid to his ex-wife and should otherwise not count as income.
Judge David H. Yun ruled that another legal provision stipulating Social Security benefits are subject to alimony payments as income was the more important one in scenarios like McClure's.
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Yun wrote that judges may "consider Social Security retirement benefits, as well as other non-assignable federal benefits, in awarding maintenance or child support, even in circumstances where the order effectively results in an indirect assignment of those benefits."
For McClure, that meant his Social Security benefits would still be considered in calculating his spousal maintenance fees even after reaching retirement age and relying on the benefits.
For other seniors, this could have wide implications.
Those who earn Social Security benefits and are responsible for alimony payments who do not currently see their benefits considered as income in their alimony calculations could be liable to pay far more in monthly payments to their ex-spouse.
Some ex-spouses receiving alimony could also have a legal reason to challenge their alimony payments and get more from their ex if they haven't properly been considering Social Security as their income.
Many states and courts have already been using Social Security as income in their calculations for alimony payments, so some seniors might not see anything change.
"While it may be surprising to some, past legal decisions have at least partially supported the idea of Social Security being used as a means for making alimony payments," Alex Beene, financial literacy instructor at the University of Tennessee at Martin, told Newsweek. "This is especially true in situations where a Judge feels an ex-spouse should continue to make payments, but because they qualify for Social Security, the amount of those payments is reduced."
Kevin Thompson, finance expert and founder/CEO of 9i Capital Group, said that for most seniors, the alimony ruling likely doesn't affect them.
"Most seniors have likely been with their spouses longer than 10 years and their Social Security spousal benefit may offset any demands on their retirement benefits," Thompson told Newsweek. "This may impact seniors, possibly in the sense of separation versus actual divorce. I could foresee seniors where this may impact, actually filing for separations versus outright divorce, to attain the number of years necessary as to not impact their Social Security benefits."
Beene said Yun's ruling could be challenged once again, especially as seniors relying on Social Security already face high inflation on housing, health care and groceries. Many may feel they can't make their dollar stretch if alimony is essentially taken out of their Social Security checks as well.
"Rulings like this will more than likely be challenged," Beene said. "As seniors deal with the rising costs of inflation, a case could be made to protect Social Security benefits in full, regardless of alimony or similar payments."
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