Social Security needs may look different for men and women.
Women and men are alike in many ways.
They are also distinctly different.
These differences do not make one better than the other.
They may, however, demand specific planning.
This is especially true when it comes to retirement planning.
According to a Money Talk News article titled “3 Costly Social Security Mistakes That Women Make,” woman should prioritize planning for their Social Security benefits.
Failing to consider unique retirement planning challenges for women could prove costly.
In general, women live longer than men.
That is an actuarial fact of life.
They often earn less over their working years, typically taking time out to rear their children to adulthood.
After all, the hand that rocks the cradle rules the world.
For this reason, Social Security planning is especially important.
What common mistakes should women avoid?
Taking Social Security benefits too early.
Saving for retirement can be challenging for women, more so if they are single.
Again, because women tend to make less and because some single women also have child rearing responsibilities (oftentimes alone), it can be harder to find financial margin for IRA contributions.
Without a spouse to bring in additional income and Social Security benefits, maximizing Social Security benefits is essential.
Nevertheless, by delaying when they start to claim Social Security benefits, women can increase their monthly benefit amount.
Forgetting about an ex-spouse.
If women have been married for at least ten years before a divorce, then they may be eligible for Social Security benefits through the work record of their ex-spouse.
They should compare earnings to those of the ex-spouse to evaluate whether they would receive a higher benefit from filing through his work record.
If she is at least age 62 and currently unmarried and the ex-spouse is at least age 62, a woman can claim the spousal benefit.
At full retirement age, the benefit for the woman must be less than half of the benefit for the ex.
Claiming a benefit from your ex-spouse will trigger a claim for your own benefit if you were born in 1954 or later.
Does one have to wait for his or her ex to file before applying for benefits?
However, if the woman remarries, she can no longer qualify for the Social Security benefits of the ex-spouse.
If this second marriage ends, the woman will again become eligible for ex-spousal benefits.
Allowing a spouse to make a unilateral claiming decision.
Waiting to claim benefits can increase the benefit amount for a surviving spouse.
In fact, a 2018 Center for Retirement Research study found that a husband delaying benefit claims could increase the survivor benefit for his wife by 7.3 percent each year.
Unfortunately, many people do not consider the long-term impact of when Social Security benefits are claimed.
It is important discuss how this decision could impact the financial security of the surviving spouse.
By avoiding these common Social Security mistakes, women can set themselves up for better financial future in retirement.
Reference: Money Talk News (Jan. 6, 2020) “3 Costly Social Security Mistakes That Women Make”