Maximizing your Social Security benefits is all about timing – when you choose to begin your monthly checks can have a tremendous impact on the amount you receive. This is especially true for women, who historically, spent some amount of time out of the workforce (as family caregivers) and who generally earn less than their male counterparts.
The Social Security Administration’s rules for retirement benefits were first set in the 1930s. While times have changed, those regulations have not, making some of the rules and procedures antiquated in light of women’s modern roles in work and family life.
As a result, women who make uninformed decisions about when and how to claim their Social Security benefits are much more likely to suffer financially than men. That’s because how much you receive in retirement benefits is largely based on your work record; the Social Security Administration averages your highest 35 years of earnings.
For women who have raised children or cared for aging parents, there may be extended periods of time during which they were not working at all. And when they were, it’s likely that they were paid less than their working husbands. These factors all contribute to a lower Social Security benefits calculation for women when retirement age finally rolls around.
Those benefits are often crucial for retired women. A 2018 survey by Nationwide found that 62% of women expect their Social Security benefits to be their primary source of income during retirement.
This reality makes maximizing your benefits all the more important. The good news is that with some thought, planning and perhaps extra help from a professional, you can make the most of this monthly payment.
Here are some things to consider when thinking about when to claim Social Security benefits:
1. Begin thinking about your options early. Planning is key to making the most prudent and rational Social Security decision. Ideally, you should begin strategizing about how your benefits will play into your larger retirement picture around age 50. To get a sense of what your benefit may be, you can go to the Social Security Administration’s website and use the Benefits Estimator to check on where you are so far.
2. Try to avoid taking the check at age 62. Even if your monthly benefit would significantly boost your budget, consider delaying your benefits as long as possible, if it makes sense for your specific situation. The earlier you elect to receive your Social Security, the lower your check will be. While the money may be helpful now, a fatter check down the road is likely the better long-term option.
3. What about your spouse? Remember, if you have been married for at least ten years, when you elect to take your benefits, you’ll receive either your benefit or up to half the amount of your spouse’s benefit (whichever is higher). This rule applies even if you’re divorced or widowed, assuming you were married for ten years or more. (Note that your benefit as a divorced spouse is equal to one-half of your ex-spouse’s full retirement amount (or disability benefit) if you start receiving benefits at your full retirement age.)
Here are the rules:
If you are divorced, but your marriage lasted ten years or longer, you can receive benefits on your ex-spouse’s record (even if he or she has remarried) if:
You are unmarried;
You are age 62 or older;
Your ex-spouse is entitled to Social Security retirement or disability benefits; and
The benefit you are entitled to receive based on your own work is less than the benefit you would receive based on your ex-spouse’s work.
If you remarry, you generally cannot collect benefits on your former spouse’s record unless your later marriage ends (whether by death, divorce or annulment). Another exception is if your ex-spouse passes away and you remarry after age 60, then you can claim your ex-spouse’s benefit if it’s larger than your own.
4. Consult with a professional.
Identifying the best Social Security strategy for an individual — or couple — can be a complex undertaking. If you have any qualms or doubts about how to proceed, consider hiring a financial professional to help you make the decision. It’s worth the investment in time and money to get the math right on a decision that will significantly impact your finances for several years.