Though Social Security is intended to cover all workers equally based on their work history, there are special provisions that can often apply to women. As men are still more likely to earn more than women, and as women are more likely than men to be non-working spouses, it is important for women to be aware of how they can maximize their social security benefits.
For example, in addition to the standard pension benefit that any eligible employee can claim, simply by being a spouse, even a non-worker, you can qualify for your own social security payment. As the nuances of social security can be complicated, you may want to consult a tax advisor or financial planner about your various options for claiming benefits. But here’s a quick overview of benefits that women in particular should not overlook when it comes to requiring social security.
Even if you have never worked, you may be entitled to a social security pension
One of the ways in which social security protects non-working spouses is by providing a spouse benefit. It can amount to up to 50% of the benefit that your spouse earns, as long as you wait to receive your benefit until you reach full retirement age.
To determine the pension benefit you will receive, the Social Security Administration first examines your own work journal. It then compares your personal benefit with the spouse benefit you are entitled to. Whichever benefit is greatest is the one you will receive.
It is worth discussing a social security strategy with your spouse and even your tax advisor or financial advisor before getting too close to retirement. If your spouse were to claim benefits at age 62, for example, their lifelong monthly payment would decrease by 30%. Since your spouse’s benefit is linked directly to the amount your spouse receives, this means that your payout will also be reduced by 30%. To maximize your shared benefits, plan a strategy in advance.
You may be able to get a spouse’s pension even if you are divorced
Although the term “spouse benefit” seems to suggest that you must be married to receive it, this is not always the case. If you were married for at least 10 years to your spouse before you divorced and are not remarried, you are entitled to the same spousal benefit as if you were married. Again, this can amount to up to 50% of your ex-spouse’s benefit as long as you wait until your full retirement age to claim it.
If your spouse (or ex) dies, you may be entitled to widowhood
If you live with your spouse when they die, you are entitled to an immediate payment of $ 255 from the Social Security Administration. However, you are also entitled to an ongoing widow’s benefit based on the amount your spouse earned at the time of their death. At the age of 60, you are entitled to a benefit corresponding to 71% of your spouse’s previous benefit or 100% at full retirement age. The Social Insurance Agency first pays the benefit to which you are entitled, and then it supplements that amount with your widow’s benefit. If you are divorced, you are entitled to this widow’s benefit, also known as survivor’s benefit, if your ex-spouse dies and you were married for at least 10 years before you were divorced.
You will probably need a supplementary pension savings in addition to social security
Even with all the advances women have made in the workplace, the sad truth is that they still do not earn anywhere near what men do. According to the Bureau of Labor Statistics, women’s annual income from 2020 was only 82.3% of men’s. This not only affects lifelong earnings, but it also reduces social security benefits. If your spouse’s work record qualified him or her for a monthly benefit of $ 2,000, your benefit would average only $ 1,646. This means that it is even more important for you to save and invest more of your salary while you work.
As of January 2022, monthly social security retirement benefits average only $ 1,657. That equates to a meager $ 19,884 a year, which is not enough for most people to live on. If you only earn 82.3% of that benefit, things will get even harder. In addition, as a woman you will probably live longer and will therefore also need a larger nest egg. But if you know and understand this in advance, you will be able to plan ahead, increase your savings rate and invest enough over the course of your working career to compensate for this shortfall.
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