Retirement planning is an important part of long-term financial wellness, and for women, who typically make less money and live longer than men, it can mean lower Social Security benefit payments and other problems. Beck, Lenox & Stolzer Estate Planning and Elder Law, LLC attorneys have seen too many situations where an older single, divorced or widowed female is in dire financial straits. An estate planning attorney can work with women to avoid the biggest mistakes with Social Security.
Money Talk News’s article from January entitled “3 Costly Social Security Mistakes That Women Make” looks at some of the costliest Social Security mistakes that women can make.
- Taking your Social Security benefits too early. Deciding to take Social Security benefits too soon can be especially costly for single women and women in same-sex relationships or marriages. Women usually have a tougher time than men saving for retirement because 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. It may be prudent for single women and women in same-sex relationships to delay claiming Social Security benefits as long as possible, so the amount of their monthly benefit is higher when they do start getting it.
- Forgetting about your ex-spouse. If you were married and then divorced, and your marriage lasted at least 10 years, you might be eligible for benefits through your ex-spouse. You should check to see if you’d get a better monthly payment by claiming through an ex’s earnings record, instead of your own. If you’re currently unmarried and at least 62, and your ex-spouse is at least 62, you can claim spousal benefits. Your own retirement benefits at full retirement age must be less than half of your ex’s benefits. (When you claim ex-spousal benefits, 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 his or her account, provided you and the ex are both at least 62. Remarriage will mean the loss of ex-spousal benefits. However, if your later marriage also ends, you again become eligible for the ex-spousal benefits.
- Allowing your spouse to make a unilateral claiming decision. 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 waiting to claim his benefits. However, the study says that many husbands don’t think about the effect that their age at claiming benefits can have on their survivor and her benefits. Rather, many husbands will look at more immediate issues and decide to claim Social Security earlier. Despite being educated about the possible effect on their wives in the future, many husbands said they wouldn’t change their claiming age.
To avoid one of the biggest mistakes women make with Social Security, talk to your spouse about when each of you should file a claim for benefits, as well as coordinate your retirement and your Social Security claims. If you need expert advice from an unbiased party, contact Beck, Lenox & Stolzer to schedule a free estate planning consultation.
Reference: Money Talk News (Jan. 6, 2020) “3 Costly Social Security Mistakes That Women Make”
