3 Costly Social Security Mistakes That Women Make

3 Costly Social Security Mistakes That Women Make
Photo by YAKOBCHUK VIACHESLAV / Shutterstock.com

Retirement planning is an important part of long-term financial wellness. For women, the process can be especially fraught.

In general, women tend to make less money and live longer than men. This combination can lead to lower Social Security benefit payments and other issues.

Let’s take a look at some of the costliest Social Security mistakes that women might make.

1. Claiming Social Security benefits too soon

Deciding to take Social Security benefits too soon can be costly for men, too, but that negative effect tends to be amplified for women, particularly for single women and women in same-sex relationships or marriages.

Women usually have it harder than men when saving for retirement, as they have lower lifetime earnings and a longer lifespan than men, on average. For single women, these challenges are compounded by the absence of a significant other bringing in additional Social Security income — or any other type of retirement income.

Additionally, in some cases, women tend to have a lower level of confidence in their financial abilities than men.

With all of these factors, it can be especially smart for single women and women in same-sex relationships to put off claiming Social Security benefits as long as possible so the amount of their monthly benefit is higher when they do start receiving it.

2. Forgetting about your ex-spouse

If you were married and then divorced — and the marriage lasted at least 10 years — you might be eligible for benefits through your ex-spouse.

So, before assuming that you must rely solely on your own Social Security account, find out if you’d get a better monthly payment by claiming through an ex’s earnings record.

“If you’re currently unmarried and at least 62, and the ex is at least 62, you can claim spousal benefits,” says Russ Settle, with Social Security Choices, a site devoted to helping people decide when to begin claiming benefits.

Settle notes that your own retirement benefits at full retirement age must be less than one-half of your ex’s benefits. (When you claim ex-spousal benefits, he says, it will trigger a claim for your own benefits, unless you were born before 1954.) Even if your ex hasn’t applied for benefits yet, you can file a claim on the ex’s account, as long as you and the ex both are at least 62.

Settle points out one caution:

“Remarriage results in a loss of ex-spousal benefits.”

If your later marriage also ends, though, you again become eligible for the ex-spousal benefits.

3. Letting your spouse make a unilateral claiming decision

If you’re married, you’d like to think that your spouse has your best interests at heart. However, that might not always be the case, especially when making decisions about when to start claiming Social Security benefits.

A 2018 study from the Center for Retirement Research found that a husband can increase his wife’s survivor benefits by 7.3% each year by delaying claiming his benefits. However, the study says, many husbands don’t consider the impact that their age at claiming benefits can have on their survivor and her benefits.

Instead, many husbands tend to consider more immediate issues and decide to claim Social Security sooner. Even after being educated about the possible impact on their wives later, many husbands said they wouldn’t change their claiming age.

It’s a good idea to sit down with your spouse and talk about how to best manage when each of you should file a claim for benefits. It’s best to coordinate your retirement and your Social Security claims.

What’s your strategy for claiming Social Security benefits? Tell us in a comment below or at Money Talks News on Facebook.

Learn everything you need to plan your dream retirement

The Only Retirement Guide You'll Ever Need gives you the knowledge you need to retire on your own terms. Sure, you can pay a financial adviser, but this online course gives you total control to create a custom retirement plan around the things that make you happy.

You're going to get expert, personalized advice. You'll have access to the latest tools. And when it's complete, you'll be able to approach your retirement confidently and with peace of mind.

It's time to plan the best years of your life. Let's get started.

Read Next

This Small City Is the Best Place to Retire in America
This Small City Is the Best Place to Retire in America

This city combines outdoor and indoor fun with an abundance of sunshine.

13 Small Gadgets Under $20 That Make Life Better
13 Small Gadgets Under $20 That Make Life Better

These inexpensive electronics will make your day-to-day life a little easier — and happier.

16 of the Most Outrageously Overpriced Products
16 of the Most Outrageously Overpriced Products

Retailers mark up products by hundreds of times their cost — but you don’t have to pay the premium.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Comments