We've made some progress as a society with the gender pay gap, but there's still a long way to go. The average woman earned just 83.6% of the average man's earnings in 2023, according to the Bureau of Labor Statistics. This leaves them with less money to cover their expenses today, and it also makes it more challenging for them to save for retirement.
The difficulty doesn't end there. When retired women apply for Social Security benefits, they receive smaller monthly checks. Here's a closer look at how much the average woman gets from Social Security compared to the average man.
Image source: Getty Images.
Why women get less from Social Security
There are a few key reasons women tend to receive smaller Social Security checks than men. We've already touched upon the gender pay gap, which was even worse in the past than it was today. In 1960, women only earned about $0.61 for every dollar that men earned. (Today, it's closer to $0.80.) So that already put them at a serious disadvantage, because your Social Security benefit is based on your earnings history.
This is compounded by the fact that women are more likely to step back from the workforce to care for young children or ill family members. Sometimes this is temporary, and other times, it's permanent. Less time in the workforce makes it more difficult for women to obtain promotions and higher-paying positions.
In addition, the Social Security Administration bases benefits on your average monthly income over your 35 highest-earning years, adjusted for inflation. If you retire before you've worked 35 years, the government introduces zero-income years into your benefit calculation. Even one of these can have serious consequences.
Consider someone who earns $60,000 per year in today's dollars for 35 years. Their benefit under the current Social Security benefit formula would be about $2,311 per month. But add one zero-income year, and their benefit drops to $2,265 per month -- $46 less. Some women face even larger deficits from a shorter work history or years when they only worked part-time.
Men receive 23% more from Social Security than women
Retired men receive substantially more from Social Security than retired women do. The table gives the average retirement benefit for men and women as of December 2023:
|
Gender |
Average Monthly Social Security Retirement Benefit, as of December 2023 |
|---|---|
|
Male |
$2,106.40 |
|
Female |
$1,713.52 |
Data source: Social Security Administration.
That's a difference of nearly $400 per month. Over a 20-year retirement, it comes out to more than $94,000 less.
This is problematic for several reasons. First, women's lower earnings and shorter work histories make it more difficult for them to save for retirement on their own. Second, women typically live longer on average, so they need to save more than their male counterparts to maintain the same lifestyle.
What should women do?
It's not an easy situation to resolve. We should see some improvement in this trend over time, since the gender pay gap has closed slightly. But women still face a difficult road when it comes to saving for retirement.
Those who aren't able to save as much as they need to may have to consider delaying retirement. Or they can opt for a phased retirement, where they slowly reduce the hours they work rather than quitting all at once.
As far as claiming Social Security, women who can afford to do so may benefit from delaying their application. Every month you wait to claim increases your checks until you qualify for your maximum benefit at 70. You can get up to 32% more per month by doing this. But the downside is you have to cover your expenses on your own until you're ready to apply.
Married women can coordinate their Social Security claiming strategy with their spouses to maximize their household benefits. If both partners' earning history is similar, it usually makes sense for both to delay as long as possible, barring financial or health issues. But if a woman has earned significantly less than her husband, she could benefit from applying early to help her husband delay Social Security to increase his benefit. When her husband applies, she can switch to a spousal benefit if it's worth more than what she's currently getting.
