Why Women Are Missing Out on 30% of Social Security Retirement Benefits
Most working people eagerly look forward to the day when they can get out of the corporate rat race and begin enjoying their retirement years. This includes the millions of working women who are nearing the age of retirement across the US. However, too many women are leaving big money on the table, according to most recent research.
When Women Retire
Based on 2014 data from the Social Security Administration, 40.8% of women aged 62 claimed their retirement benefits, 65% of women aged 66 or below claimed theirs, and only 2.8% women aged 70 or over claimed theirs. While the eligible age to claim benefits is 62, women who take their benefits at this early age reduce their benefits by as much as 30% over those who wait until age 65. This means, a woman may be eligible to receive $1200 a month in regular Social Security payments, but by taking her benefits early, this number drops to $840 a month.
Over a year’s time, that loss adds up to $4,320 and if she lives to the age of 85, she loses up to $99,360 in lifetime benefits.
When a woman reaches full retirement age (65), she is generally eligible for either her own full Social Security benefits or half of her spouses (whichever is the larger amount). If she claims benefits early, at age 62, she only gets 70.4% of her benefits and a paltry 32.5% of her spouse’s benefits.
Too Many Women Living Without
A Center for Retirement Research at Boston College study indicated that women have typically retired around the same age for nearly a decade. But, this doesn’t explain the 2.9 million American women over the age of 65 who currently live below the poverty line — which is more than twice the 1.3 million men who live in poverty, based on data from the National Women’s Law Center. While men generally have some other form of income to live comfortably on, women are five times more likely than men to survive on Social Security benefits alone.
Woman are often forced to take part-time jobs or rely on children to make ends meet.
These factors are changing some as a new generation of women are staying employed for longer periods of time, and earning more than their spouses, but when considering the high number of women who still rely on a spouse’s benefits to pay for basic needs, many go without. Housing, which used to be a staple of a retirement plan, has become so expensive in many areas with tax hikes that retirees can no longer afford to stay in the homes they worked so hard to buy. Many are faced with health issues that tap out resources in months, rather than the years they planned to be retired.
It’s incredible to think that the government expects a retired person, with medical costs, to live comfortably on less than what a person earning minimum wage earns.
How Women Can Get More From Retirement Benefits
Financial experts advise two strategies for women who want to live better upon retirement. Number one — start a retirement fund as soon as possible while still employed and put as many pre-tax earnings as possible away in a conservative investment. If a woman can save $100 a month in a retirement fund, starting around the age of 35, she can easily accrue around $1 million in tax-sheltered retirement savings by the age of 70.
Secondly, financial experts recommend holding off on collecting Social Security benefits until well after the full retirement age. For each year that a woman delays her benefits, she earns up to an 8% delayed retirement credit that can increase her benefits by as much as 32% if she waits until age 70 to claim benefits. This doesn’t mean that a woman has to stop working or live without. Women can tap into their other forms of savings, reverse mortgages, and financial investments until this time.
Use this handy retirement calculator to determine when the best time to retire is for you.