Women more so than men have to think about their Social Security options, a subject they may have little information on, say financial advisors.
Women are more likely to to need Social Security as they live a longer life in retirement, but they also are more likely to take benefits early, reducing their lifetime income.
“I have so many women clients who come to me after they have started taking benefits. Often they could have done so much better if they had waited,” says Deana Arnett, senior planning consultant at Rosenthal Wealth Management Group in Manassas, Va. “Social Security is not a straightforward proposition and so many times women do not know their options.”
Shawn Britt, director of long term care initiatives for Nationwide, offers a similar warning to women.
Despite the fact that women live longer than men and that Social Security benefits increase the longer you wait to take them, few women wait. “According to a Nationwide survey, only 15 percent of women wait until their full retirement age [usually 66] and only 3 percent delay past their full retirement age to take benefits,” Britt says.
“Once a mistake is made, you cannot go back and change your decision,” Britt warns. “That is why I like a little-known provision that I call the ‘on the fence’ feature. If you can’t decide when to take Social Security, file for it and suspend benefits while you think about it. You won’t lose money if you decide to wait until a later date to start taking benefits.
Social Security benefits are reduced for the lifetime of the recipient if taken before 66. They build by about 8 percent a year for each year waited after 66.
Because women often take time out of the workforce to raise children and they are still paid only 75 percent of what men are paid at all income levels, women’s Social Security benefits are usually less then men’s, according to the Social Security Administration.
In 2013, the average annual Social Security income received by a woman 65 years and older was $12,857, compared to $16,590 for men, the Social Security Administration says. At the same time, 49 percent of all elderly unmarried females receiving benefits rely on Social Security for 90 percent or more of their income.
Also, among people 65 and older, more than twice as many women (nearly 2.9 million) live in poverty in 2013 versus men (1.3 million).