There are smart ways for single, divorced, and widowed women to capture more Social Security income over their lifetimes. Women should take measures to draw on the Social Security system in the most productive way possible. Consequently, it is important they be informed and smart about the choices that are available to them. Women outlive men by 4 to 5 years on average and, as a whole, tend to have a lower lifetime Social Security earnings history than men. By using clever strategies available to Social Security claimants, women can help provide an added safety net for themselves by intelligently planning for this stable, guaranteed lifetime income stream.
Women are significant contributors to the Social Security entitlement program. So, it is important for them to make the most of their Social Security income election decision. One striking statistic is that nearly 60% of the female population was engaged in the United States labor force in 2010. Their Social Security contributions have significantly helped strengthen Social Security in a way that was not expected when it was founded. Not only are women boosting their individual retirement savings, but over the past four decades, women are living longer, and their contributions have helped continue to keep the Social Security system solvent.
A single woman who has never married may be able to collect greater cumulative lifetime income by examining her top earning years and trying to further build her projected Social Security income benefit. Generally, she will collect more income by delaying the age at which she starts collecting benefits from eligibility at 62 up to the full retirement age (FRA) of 66. For those born between 1943 and 1954, they will receive 100% of their Social Security income benefit at age 66 (source: Social Security). And if she thinks she will live past age 78, it could be to her advantage to keep working and delay claiming benefits until age 66 or even age 70. Many surveys indicate that people tend to underestimate their life expectancies, which can significantly shortchange the amount of lifetime Social Security income they might receive.
As a single, divorced woman, there may be several strategies available to get more income. She may be eligible to collect off her ex-spouse’s earnings if those benefits are greater than those of her own earnings. In addition, she may start to collect these benefits off her ex-spouse at her FRA while her own earnings benefit record continues to grow “in the background.” By waiting and then switching to the higher benefit from her own earnings at a later time, a single, divorced woman can potentially collect tens of thousands of additional income over her lifetime. Note that this technique may work in some, but not all, situations.
A single, widowed woman can receive full survivor benefits when she reaches FRA or reduced benefits as early as age 60. Her benefit amount will depend on her age and on the amount her deceased husband was entitled to when he died. If he was already receiving reduced benefits, her survivor benefit will be based on that amount. However, as a widow, if she waits to begin survivor benefits until her FRA, she is entitled to his full benefit, including any delayed retirement credits, if he passed away prior to claiming his Social Security.
As outlined, each woman will have circumstances that are unique to her own situation. The important point is that she needs to understand there are rules and techniques to learn that can possibly help her get more Social Security income over her lifetime. The rules are complex and unique to her own situation, so she may wish to contact a Financial Advisor proficient in the area of Social Security income planning to help guide her through these decisions.
If a woman has claimed Social Security income within the last 12 months and feels she may have made an incorrect income election, there still may be time to fix it and execute an election re-do. If she is approaching retirement age, becoming informed will help her make a more beneficial decision. A somewhat recent December 2010 ruling now allows the consumer only 12 months after making an income election to fix, or re-do it. Qualified recipients are entitled to collect this guaranteed, inflation-adjusted, lifetime income stream. Women who make it a priority to become smarter about their Social Security election benefits are likely to have a more secure future.
If you are a widow or divorced woman and would like to explore strategies to get the most from your Social Security benefits, please contact me. I’d be happy to discuss this with you.