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 wives’ future 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 plans and your Social Security claims.