Women and Social Security: How to Get the Biggest Check

As a single woman with no children, Karen Callahan collects the financial resources that will protect her for a potentially long life on her own. A big piece of their puzzle: getting as much social security income as possible.

Ms. Callahan, 67, of Marlborough, Massachusetts, withholds her benefits until she turns 70, when she is entitled to $ 3,100 a month. If she applied today, she said, her benefit would be permanently reduced to about $ 2,500.

The income from a web design company she owns will cover her expenses up to 70 including a monthly condo fee of $ 375 on her townhouse. In the best of health and able to do a 120 pound bench press, Ms. Callahan expects to live long enough to get more life-cycle benefits by waiting than if she did less for extended periods of time.

“Hellbell – I put the money in and I will get the maximum out of it,” she said.

For many older single women, as well as divorced women and widows, getting the most out of social security is crucial, experts say. Women tend to live longer than men and are more reliant on social security as the main source of income in retirement. In addition, their benefits are lower on average, partly due to loss of earnings or part-time work during the years when children and older relatives are cared for.

Even so, many women leave significant amounts of this guaranteed source of inflation-adjusted money on the table, said Marcia Mantell, Plymouth, Massachusetts pension advisor and author of “What’s the Deal With Social Security for Women?”

“This safety net is incredibly important in old age,” she said. “Yet most women do not understand how to take full advantage of these benefits.”

Younger women, with years of work ahead of them, can begin to maximize benefits, Ms. Mantell said, by finding jobs with more money and asking for pay rises, which “brings higher benefits tomorrow.”

To start cutting through the quagmire, it is helpful to know the basics. A key concept is full retirement age – when one is entitled to full benefit based on income. A person born between 1943 and 1954 can claim a full old-age pension at the age of 66. The full retirement age will gradually increase to 67 for people born in 1960 or later.

A person cannot live to be 62 years old at the earliest, but the benefit is permanently reduced by a certain percentage for each month the beneficiary takes before reaching full retirement age. For example, a woman with a full retirement age of 67 will receive 70 percent of her full benefit if she files an application at age 62.

For every year in which a beneficiary postpones the entitlement between full retirement age and the age of 70, the benefit increases by 8 percent; this is known as a delayed retirement credit.

For couples, including married same-sex couples, a lower-income spouse can apply for a “spouse” benefit in their partner’s employment file by the age of 62, but only after the other partner has started moving in. At full retirement age, the low-wage earner can draw a spouse’s pension amounting to 50 percent of the full retirement pension of the higher-income earner.

A prospective beneficiary can view their social security card online, which contains a record of their annual earnings and, based on those records, provides estimates of how much they will receive when they reach full retirement age, or by filing an application at age 62 or waiting until 70.

A single woman who either never married or whose marriage was short-lived should delay applying for benefits as long as possible, experts say.

Let’s say a woman at 67 is due a monthly benefit of $ 2,000. When she turns 62, she will be paid $ 1,400. If she waits until 70, her performance will be $ 2,480 – a 77 percent increase in monthly income for life.

“For single women, longevity is the greatest risk,” said Ms. Mantell. “Even if she waits just one more year beyond her full retirement age, she will get another 8 percent in benefits.”

If one does not die relatively early, a person is likely to reach the age at which total lifelong benefits from deferment exceed total lifelong benefits from previous lesser benefits, according to research by William Reichenstein and William Meyer. You are the primary person in charge of Social Security Solutions, a company that uses breakthrough software to help individuals and couples maximize lifelong benefits.

This likelihood is especially true for women. In 2019, the average expected life expectancy for 65-year-old American women was 85.8 years, according to the U.S. Administration on Aging.

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“Unless a single woman has a below-average life expectancy, she can maximize her benefits by waiting until she is 70,” said Dr. Reichenstein, Professor Emeritus of Investments at Baylor University.

A single woman may also be able to upgrade her benefits by deferring retirement. The Social Security Agency calculates monthly benefits by examining a beneficiary’s 35 highest paid years. Part-time work can also replace “zeros” for years of maintenance.

Ms. Callahan said she expected her income from prolonged work to replace the low-income years she started her business and the years she was a teacher and not paying into social security but receiving a pension. (Public employees in about a dozen states are not covered by social security.)

Women who may have lost their jobs during the pandemic and requested cuts early have a chance at redress. One option is to “suspend” their benefits at full retirement age and resume them later, perhaps at 70.

“The late retirement credits largely offset the reduced payments from the early entitlement,” said Ms. Mantell.

Women are generally worse off financially than men after a divorce, but an ex-wife can mitigate the damage by claiming a spouse’s or survivor’s benefit on her ex-husband’s employment file.

“Many women who have cared for their children for years get divorced after decades of marriage,” said Michelle Petrowski, a certified financial planner in Scottsdale, Arizona who specializes in divorce matters. “They haven’t had the opportunity to earn an income or donate to a 401 (k) and they rely on that achievement.”

For a divorced woman to be eligible for spousal allowance, both spouses must be at least 62 years old and the marriage must have lasted at least 10 years. Unlike a married woman, a divorced woman can make claims even if her ex-husband has not yet applied for benefits.

A divorced woman waiting until retirement age can claim a spouse’s pension equal to 50 percent of her ex-spouse’s full benefit. The benefit is reduced by a certain percentage for each month that it draws up until then.

This higher benefit can result in substantial pension benefits for a woman whose marriage may have ended decades earlier.

Imagine a woman whose full power is $ 2,400, said Dr. Reichenstein. Perhaps her own retirement benefit is $ 800. If she applies for spouse benefit at age 67, she will receive $ 1,200 per month, which will accumulate $ 259,200 by age 85. If she files an application at 62, her monthly benefit will be $ 830 – a decrease of $ 30,000 by the age of 85.

A woman who has two or more ex-spouses who she has been married to for 10 years can choose the highest spousal allowance. And if one of the ex-spouses dies, they can switch to a larger survivor benefit. An ex-wife loses the spouse’s allowance if she remarries.

An ex-husband will not be notified if his ex-wife requests a benefit on his file. His benefit will not be reduced, nor will the spouse’s benefit of his current wife be reduced.

About 32 percent of all widows who received social security survivor benefits in 2018 were between the ages of 60 and 70, according to the Social Security Administration.

Increasing the “utility” for widows in this younger area is critical, said Laura Mattia, certified financial planner with Atlas Fiduciary Financial in Sarasota, Florida. “A widow can live another 30 years and has to be financially responsible for herself. ” She said.

A widow who claims the survivor’s benefit at full retirement age is entitled to 100 percent of the benefit that her deceased spouse received or was entitled to. A widow can make a claim at the age of 60 (50 if disabled), but her benefit is permanently reduced for every month she applies for before her full retirement age. A younger widow may be eligible if she is caring for the children of the deceased spouse.

A widow in her late 50s or early 60s with little or no income of her own is likely to get the largest lifelong payout by waiting until 66 or 67 to file a claim. Dr. However, Mattia said “the decision of when to make a claim is becoming more”. complicated when she has her own workers’ allowance. “

A widow receiving an earnings-related old-age pension has several options.

One option is to apply for your own smaller old-age pension at 62 and then switch to the larger survivor’s pension at 66 or 67. In this way, at 62, she creates an income stream while increasing her survivor’s pension.

But a woman whose old-age pension will be higher than the survivor’s benefit at 70 should take the survivor’s benefit early, perhaps at 60 or 62, and let her own benefit grow, reinforced by delayed retirement credits, experts advise.

“The main rule for a widow is to compare her retirement pension at 70 and her full survivor’s pension, which would start at her full retirement age,” said Dr. Reichenstein.

A husband plays a huge role in ensuring his wife’s financial security after his death, said Dr. Mattia. She often advises husbands not to make use of their own benefits until they are 70 and thus to increase the survivor’s benefit.

“He might think, ‘I won’t live that long,’ but she could live a much longer life in the meantime,” said Dr. Mattia.

Whatever strategy a woman uses, financial planners say social security should only be part of the source of income in retirement. By the time Ms. Callahan turns 70, she expects to meet half of her expenses, including travel expenses, with three things: profits from the sale of her business, assets in her individual retirement account, and possibly money from part-time work.

The other half is covered by social security. Waiting until 70 to pick up would give her a much better chance of “living the lifestyle I want to live”.

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