A 65-year-old woman is contemplating divorce after her millionaire husband, who inherited a vast fortune, refuses to share his wealth with her. Despite owning five rental properties together, two of which were inherited, the woman has been forced into financial insecurity. Her husband pressured her to begin drawing Social Security benefits at 62, resulting in a permanent reduction in her monthly payments. This has left her feeling trapped in a modest lifestyle while her husband keeps his inheritance to himself.
Financial Control and Early Social Security Withdrawal
The Texas woman, who shared her story with MarketWatch, explains that her husband keeps her in the dark about his finances and refuses to deposit money into her personal account. Although they have a joint account where rental income is deposited, she remains unsure of her rights to that income or the inheritance in the event of a divorce. The husband's coercion to force her into taking early Social Security benefits further compounds her financial struggles, locking her into reduced payments for life.
Controlling a partner's finances is a form of domestic abuse that often erodes the victim's self-confidence and independence over time. In her case, it seems her husband's control and pressure led her to accept early Social Security withdrawals, despite knowing she'd lose significant income by doing so.
The Cost of Early Social Security Benefits
Choosing to take Social Security benefits at 62 comes at a steep cost. According to estimates from the Social Security Administration, monthly payments are reduced by 30% for those withdrawing at 62 compared to those waiting until full retirement age, which is 67 for those born after 1960. Additionally, if someone can defer benefits until age 70, their payouts increase incrementally for every month of delay. The woman's decision to take benefits early could result in a lifetime financial loss of hundreds of thousands of dollars.
Her situation highlights the importance of enrolling in Medicare at 65, as any delay could further complicate her financial and healthcare coverage.
Inheritance Rights and Rental Income in Divorce
In the event of a divorce, the woman's rights to her husband's inheritance and their joint assets would depend on how the money and properties were handled during the marriage. In Texas, which follows community property laws, assets acquired after marriage are typically shared between spouses. However, inheritance is generally considered separate property unless the funds were commingled, such as deposited into a joint bank account.
The rental income from properties owned before the marriage would not be considered commingled, and thus, she may not be entitled to that income. Her best course of action would be to consult an attorney to assess her legal standing and rights to the joint account and other marital assets.
The Bigger Picture: Early Retirement and Financial Loss
A 2022 study by Boston University and the Federal Reserve Bank of Atlanta found that most people would benefit from delaying Social Security benefits until age 70, though only 10.2% of retirees actually do so. The study estimates that taking benefits early reduces lifetime discretionary spending by over $182,000 for the median worker nearing retirement.
While the financial impact of taking Social Security early can be devastating, experts argue that the decision depends on individual health and life expectancy. The woman's case is a unique example of the pressures some face to retire early, though many others cite health issues, financial hardship, or changes in the workplace as reasons for early retirement.
