Women Need to Think Differently About Social Security

Mar 16, 2021 / Amanda Chase, Horsesmouth Associate Editor

Clients often believe that there is no difference between retirement planning for men and women. However, women’s longer life expectancies (86 years compared to 84 for men) makes it more likely that they will run out of money before they die without proper planning. The planning needs and strategies for a woman should focus more heavily on longevity and creating lifetime income streams after her spouse has passed away. (In this article, we discuss planning strategies assuming a male-female marriage; however, many of the strategies discussed can also be applied to same-sex married couples.)

There are three types of Social Security benefits: a person’s own benefits stemming from their work history, their spousal benefits, and surviving spouse benefits for widows and widowers. Modern trends for women show that the rates of working women have risen over time, so more women can claim their own Social Security benefits. However, average benefits for women are lower than men’s benefits because earnings for women are lower and women are more likely to pause working for a few years to focus on childcare. In addition, marriage rates and the average length of marriages have fallen over time, which impacts a woman’s ability to claim spousal and survivor benefits.

Start planning now. A strategy for claiming benefits can and should be developed as early as 10 or 15 years away from retirement. or a single woman who has never married or was married for less than 10 years, the claiming strategy rests on her expected longevity. If she is in good health, explore whether she can delay claiming benefits until age 70 so that her benefits will be higher. If she is in poor health and may not live until her full life expectancy, it may make sense to claim before 70. If both spouses are alive, consider the incomes earned by the spouses: the lower earning spouse can claim their own benefit earlier, leaving the higher benefits to grow and be claimed by the other spouse at age 70. Even if a woman has never worked or worked for fewer than 10 years, she can claim both the spousal benefit and survivor benefit if she becomes widowed.

You can find the full article at Financial-Planning.com.


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