Divorced spouses' Social Security benefits

What happened: Divorced individuals face potential loss or reduction of Social Security spousal benefits under certain conditions. These include divorcing before being married for 10 consecutive years, remarriage, or incarceration for 30 consecutive days or more. Conversely, divorced individuals can claim up to 50% of their ex-spouse's full Social Security retirement benefit, provided they were married for at least 10 years, are unmarried, are 62 or older, and their ex is receiving benefits.

Market impact: This narrative primarily affects divorced individuals' retirement planning and income streams. It does not directly impact specific sectors or companies. However, it may influence financial advisors and retirement planning services, as they need to educate clients about these rules and potential benefits.

What to watch next: The full retirement age for Social Security, currently 66 and gradually increasing to 67, is a key catalyst. As more baby boomers reach this age, the number of divorced individuals eligible for spousal benefits will likely increase. Additionally, any changes to Social Security laws or benefits, such as those proposed in President Biden's 2023 budget, could significantly impact this narrative.