The Girlfriends' Guide to Social Security

When I am hanging out with my girlfriends, we chat about… our kids, our health, spouses, partners, potential partners, or potential spouses. We chat about our lives.

Chat about Social Security? Not so much.

But maybe we should add that to the mix every now and then.

Women have special concerns when it comes to Social Security. I think we all know why, but just in case—I’ll tell you.

Social Security benefits are an important component of retirement income, and women on average live longer than men. In the U.S., life expectancy at birth is about 81 years for a female, vs. about 76 years for a male. Among those currently over 65, women still are expected to live about 2 ½ years longer than men. 

Social Security benefits are based in part on lifetime earnings, which for women are often lower than men. 

Marriages don’t always come with fairy-tale endings. Forty to fifty percent of married couples in the U.S. get divorced. Women who find themselves in control of their own finances may need to understand the implications of divorce and remarriage on their Social Security benefits.

Talking about Social Security is not as exciting as a new restaurant suggestion. But it’s important to our financial health.  

I’ll start with the basics. For my girlfriends, Social Security benefits are generally based on either their earnings (retirement benefits), or the earnings of their spouse or partner (spousal benefits). 

Let’s look at these benefits based on a few categories my girlfriends fall into:

All the Single Ladies

If you are single or were married for less than 10 years, waiting may be your best strategy. 

While you can start receiving Social Security retirement benefits as early as age 62, those benefits are reduced by a small percent for each month before your full retirement age. If you were born in 1960 or later, your full retirement age is age 67. But if you delay taking benefits at your full retirement age, your benefits increase by 8% each year until age 70 (at which point the benefits are “maxed”). The takeaway—if you are in good health and have other sources of income, it may pay to delay—wait to start taking your benefits until you are 70. 

Married Girlfriends

If your retirement benefits are greater than those of your husband/partner, you may be better off waiting until you reach age 70 to claim them.

If you are a woman whose retirement benefits are lower than those of your husband/partner, it may make sense for you to claim these benefits earlier. When your husband/partner claims their retirement benefits, you may switch over to spousal benefits (as much as 50% of your husband’s/partner’s benefits) if those are higher than your own retirement benefits.

Divorced Girlfriends

Generally, if you were married at least 10 years before your divorce (and have not remarried), you can claim spousal benefits beginning at age 62. If you remarry, you can claim benefits based on your new spouse’s income. 

Widowed Girlfriends

Widows can receive full survivor benefits (based on your deceased spouse’s earnings at full retirement age), or reduced survivor benefits as early as age 60. If a woman qualifies for higher retirement benefits based on her own work history, she can switch to this higher benefit as early as age 62. If a widow remarries after age 60, your remarriage will not affect eligibility for survivor’s benefits.

The Takeaway

Like life and relationships themselves, Social Security benefit-claiming strategies can be complicated. While some decisions are clear-cut, others depend on your thinking about health, life expectancy, and the need for income to pay the bills. Everyone’s situation is different—“rules of thumb” may help, but may not always be the best guide.

Girlfriends, research your options and understand the implications.

Clients often ask us to model different Social Security claiming strategies and help assess which one has the best probability of maximizing their lifetime benefits. We are able to use sophisticated financial software to evaluate the various options. Please let me know if we can help. 

Ok, back to our regular girlfriend chit chat—where do you want to grab dinner Friday night?

The author does not intend to provide investment, legal or tax advice as these materials are for general educational purposes only.  Please consult your legal, tax or investment professional for advice on your particular situation. This material is derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. It is not intended to be a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction. Investing involves risk including the possible loss of principal. Past performance does not guarantee future results. Please refer to RRCM’s Form ADV Part 2 for additional disclosures regarding RRCM and its practices.