Like anyone who is about to retire, you probably want to know how much income you will receive when you begin collecting your Social Security. There isn’t necessarily a cut-and-dry answer for this; much of it depends on you and the decisions you make in the years leading up to and during your retirement. This is true for anyone, male or female. However, for this specific blog post, I will be focusing more specifically on Social Security benefits for women.
More often than not, people claim their Social Security benefits as soon as they retire. It’s an instinctive reaction of both men and women when they retire, and I suppose on some level that makes sense. You’re retired—it’s finally time for you to cash in on your Social Security, right? Well, not necessarily…
What many people fail to understand before claiming their Social Security is the fact that they have options that can maximize their benefits. These options can drastically change the amount of income you receive from Social Security, and it can be as simple as making the choice to delay when you claim.
If you claim your Social Security before full retirement age, your benefits will be minimized, and sometimes to an extreme degree.
This poses a problem for many women, seeing as the average retirement age for women is 62, which, as you know, is younger than the full retirement age. These women who make the mistake of filing too early run the risk of cutting their Social Security benefits by as much as 30%. This 30% reduction in benefits will last the rest of her life.
It may be a different story if women, in general, received a sufficient income stream from other places. However, women generally rely more on Social Security as their only form of income than men do.
According to the National Women’s Law Center, “For three in ten female beneficiaries 65 and older (30 percent), Social Security is virtually the only source of income (90 percent or more). Just over two in ten male beneficiaries (23 percent) rely on Social Security for 90 percent or more of their income.”¹
And these percentages increase with age… “The percentage of female beneficiaries who rely on Social Security for virtually all of their income almost doubles with age: from 20 percent for women 65-69 to 39 percent for women 80 and older. Male beneficiaries’ reliance on Social Security increases with age to a lesser extent: from 16 percent for men 65-69 to 30 percent for men 80 and older.” ¹
To take it a step further, Social Security benefits for women are typically lower than they are for men: “The average Social Security benefit for women 65 and older is about $13,500 per year, compared to about $17,600 for men 65 and older.” 1
What I find most alarming about all of this is the fact that, according to the National Women’s Law Center, nearly half of women 65 and older would be poor without Social Security.
This is all the more reason to avoid filing for Social Security too early. The same goes for women who are planning on receiving spousal benefits…
They, too, will receive reduced Social Security payments if they claim before full retirement age. Waiting full retirement age to file will qualify her to receive the larger number between her own full benefit or half of her spouse’s.
The options look very different for women who claim at age 62; they either qualify for their decreased benefit or as little as 32.5% of her spouse’s.²
So, how can you get the absolute most out of your Social Security benefits and increase your future income?
Truthfully, there are a number ways, and it depends on your specific situation and individual goals. This is true for both men and women. However, the easiest way to ensure you’re getting the most out of your Social Security benefits is simply by delaying when you claim.
According to an article I recently read on YahooFinance.com, “a woman who holds off on collecting Social Security after her full retirement age will receive delayed retirement credits that will boost her benefit as much as 8 percent for every year she waits until age 70. In other words, a woman whose full retirement age is 66 would receive a benefit reduced by as much as 30 percent if she retired at 62, but if she waited until age 70, it could increase by as much as 32 percent.” ²
To look at it from another angle, “delaying a Social Security claim from age 62 to age 70 can increase the value of the benefit by as much as 76 percent, according to research by David Laster and Anil Suri of Merrill Lynch.” ²
What it really comes down to, like I said before, is your personal situation. Everyone’s scenario is different, therefore everyone requires a different plan in order to reach their unique goals. This is true for everyone: men, women, married couples, and divorced couples.
Make sure you’re doing everything you can to maximize your Social Security benefits before you decide to claim.