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.
Let’s take a look at three different scenarios.
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. Those born between 1943 and 1954 will receive 100 percent 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. People tend to underestimate their life expectancies, which can significantly shortchange their lifetime Social Security income.
A single, divorced woman 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 as early as 62 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, she can potentially collect tens of thousands of dollars in additional income over her lifetime. This technique may not work in 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.
There are rules and techniques that can possibly help each woman 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.
If a woman has claimed Social Security income within the last 12 months and feels she may have made an error, there still may be time to fix it. If she is approaching retirement age, becoming informed will help her make a more beneficial decision. 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.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. The preceding are hypothetical examples and not representative of any specific scenarios. Your results may vary.
Vincent J. Catania, CFP®, MBA
is a Registered Representative with,
and securites offered through, LPL
Financial, Member FINRA/SIPC
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