When it comes to saving and investing for retirement -- and personal finances in general -- there are some key differences between women and men. On average, for example, women earn less and are often out of the workforce for a while, caring for children or others. That can lead to smaller Social Security benefits come retirement.
Many women feel much less confident about finances and investing, too (though women tend to do better at investing than men). Knowing many women feel underinformed about Social Security, among other topics, the Social Security Administration (SSA) recently offered six "important points" for women to consider regarding Social Security. Those tips also apply to men and can help anyone beef up their future retirement income.
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Here's a look at the SSA's six points.
1. Claiming benefits
The SSA notes, "Benefits can be reduced by up to 30% if you claim as soon as you are eligible, before your full retirement age." It's true. Each of us has a full retirement age at which we can start collecting the full benefits to which we're entitled based on our earnings history. It's 67 for most folks working today. We can start collecting as early as age 62, though. If you start early, your benefit checks will be smaller -- but you'll collect many more of them than if you'd started on time or late.
Delaying when you start collecting your benefits, up to age 70, will make them about 8% bigger for each year beyond your full retirement age. This is worth aiming for if you can, and it might require you to tap other retirement accounts more heavily until you hit age 70. Maximizing your benefit this way will mean a bigger benefit will be increased over time via cost-of-living adjustments (COLAs), and it will be an income source that's pretty much guaranteed for life.
2. Considering your health
Your health and how long you might live should play a part in your decision about when to start Social Security checks rolling. You probably don't know exactly how long you'll live, but if you stand a decent chance of living a longer-than-average life, it can be well worth it to try to delay until age 70. If you're in poor health and many relatives have died young, starting early might make good sense.
Note that for anyone living an average-length life, you'll collect roughly the same total benefits over your life, no matter when you start collecting them. But there are still some good reasons for some people to start early or late.
3. Taking spouse's benefits into account
According to the SSA, "Married people are eligible to claim spouse's benefits and are also eligible to claim their own benefits if they worked for at least 10 years." This is an important detail for anyone with a modest working history -- and that can include women or men who stayed home for many years caring for children. The SSA adds, "Even if you have never worked or worked for less than 10 years, you can claim spouse's benefits after the income-earning spouse has claimed benefits."
If you're married and expect to collect two Social Security benefit checks in retirement, consider trying to delay collecting the higher earner's benefits until age 70, if possible, to maximize them. Read on to learn why.
4. Handling benefits for surviving spouses
When one spouse in a marriage dies, the survivor will collect only one Social Security benefit check from that point on -- but it will be the larger of the two, making it worth trying to maximize the higher-earner's benefit.
The rules for surviving spouses are actually much trickier than that, as depending on your age and your spouse's age when they died, you may be able to collect up to 100% of their Social Security benefit. If you think you may want or need to claim survivor benefits, read much more about them and perhaps consult a financial advisor or the SSA itself.
5. Addressing divorce
Sadly, divorce is a fact of life for many people, but it's not all bad news in terms of Social Security. If you were married for at least 10 years before divorcing and haven't remarried, you can claim benefits based on your ex-spouse's work history if they'll be bigger than your own benefits. If this might apply to you, read up on divorce and Social Security.
6. Planning early
Finally, whether you're female or male, near retirement or with decades left to work, it's smart to start thinking about and planning for Social Security as soon as possible. You might start by setting up a my Social Security account at the SSA website. After doing so, you can click in at any time to see the latest estimates of your future benefits based on your earnings.
If you're expecting to collect a lot from Social Security, think again -- the average monthly retirement benefit was just $1,839 as of July, or about $22,000 for the year. If you and/or your spouse were above-average earners, you can expect more, but not gobs more. So both women and men should be making smart moves regarding Social Security. Each should also formulate a detailed retirement plan -- figuring out how much you'll need in retirement, how you'll get it, and how you'll spend it.
