Social Security benefits are a perennially popular topic of discussion — will they continue to be available? What percentage is available when, and for whom?
What deserves even greater attention, especially among women, are the decisions about working, retirement and Social Security benefits that could negatively impact their long-term financial security. This subject is particularly pressing because women represent over 55% of all adult Social Security beneficiaries, and at age 85 and over, they represent nearly two-thirds of all beneficiaries.1
By verifying that female clients of all ages consider the many factors that may affect their Social Security benefits, you can help empower them to maximize their benefits and build sound financial strategies for retirement. While Social Security benefits are gender-neutral, statistically, women earn less over their lifetimes, live longer than men, and rely on Social Security benefits for a greater percentage of their income — so this is a conversation that should not be put off.2
- There are several reasons many women should delay taking Social Security payments. The earliest a person can claim Social Security retirement benefits is 62 years old. Claiming at age 62 instead of waiting to reach full retirement age, or FRA — the age at which full benefits are available, as determined by birth year — means a significant reduction in monthly payments, as much as 30% depending on the individual’s FRA.3 In addition, benefits are determined by an individual’s highest-earning 35 years — and many women leave the workforce or work part-time while caring for children or other family members. Working later can offset those “zero” years with earnings — and that can increase benefits.4
- Women often pay a price for longevity. In general, women who reach 65 outlive men in the same age cohort by two and a half years, which translates to not more years of living expenses, but also a greater likelihood of needing long-term care. While many retirees never need long term care, on average, women need long-term support services for a year and a half longer than men.5
- Divorced women may qualify for spousal benefits. For divorced women aged 62 or older who were married at least 10 years and did not remarry before becoming eligible for benefits, with ex-spouses receiving or eligible for retirement or disability benefits, a spousal benefit up to to half of the ex-spouse’s FRA Social Security benefit may be available.6 These benefits don’t negatively impact the ex-spouse’s benefits. Some women may worry if they signed divorce agreements that relinquished their rights to Social Security benefits based on their ex-spouse’s earnings; for women who were married more than 10 years, those clauses are not enforceable.7
- Widowed women have a choice in benefits. Surviving spouses who are eligible for Social Security benefits can choose to collect based on their own earnings record, or opt for collecting a survivor benefit. Like the Social Security Administration (SSA) “restricted application” discussed above, widows may collect the widow benefit and delay switching to their own benefits to leverage the benefits increase for each year they postpone collection beyond FRA.8
- Married women born on or before January 1, 1954, may be able to continue collecting a spousal benefit. This SSA “restricted application” allows a woman to collect 50% of her spouse’s Social Security benefit amount (provided the spouse is claiming benefits) while accruing her own benefits. Once she turns 70, she can switch to her own, higher benefit. (Note that in a few years, these women will reach 70 years old, and this “restricted application” is not available to women born after January 1, 1954.)9
A comprehensive view of the risks and rewards of choices that affect Social Security benefits can help your female clients make confident retirement-related decisions. Help clients financially prepare for retirement with CUNA Mutual Group longevity and risk control annuities, and clear up confusion with the information found in Answers to Common Social Security Questions. Just click the button below.
1Social Security Administration, Social Security beneficiaries by age, June 2020.
2Social Security Administration, Fact Sheet: Social Security Is Important to Women, July 2019.
3Social Security Administration, Retirement Age Calculator, no date.
4Social Security Administration, Your Retirement Benefit: How It’s Figured, January 2020.
5U.S. Department of Health and Human Services, How Much Care Will You Need? Updated October 15, 2020.
6Social Security Administration, Retirement Benefits, No date.
7Social Security Administration, 5 Things Every Woman Should Know About Social Security, no date.
8Social Security Administration, If You Are The Survivor, no date.
9Social Security Administration, Retirement Benefits, no date.