Social Security is an essential source of retirement income, especially for women. But how well do you grasp the rewards you’re due?
Here are seven things women should know about Social Security in retirement.
1. Women Face Greater Financial Challenges in Retirement Than Men
More women rely on Social Security than men, yet their benefits are often lower.
After all, the more you work and pay taxes, the more Social Security credits you earn and the bigger income you receive.
Yet the average overall wage earnings for women is only $27,165 compared to $43,703 for males, according to a 2021 Fidelity study.
Women also tend to receive smaller pensions and have fewer assets than males, yet they normally live longer, according to the Social Security Administration (SSA).
To minimize financial issues in retirement, women should save properly and understand what Social Security payments they’re eligible to receive.
2. You Can Receive Partial Benefits at 62 Years Old
As long as you worked and paid Social Security taxes for at least 10 years and you achieved at least 40 work credits, you can start getting partial benefits at 62, according to the SSA.
If you wait until full retirement age to begin receiving your benefits, you will receive 100 percent of your qualifying benefits.
The SSA judges “full retirement age” to be between 66 and 67, depending on your birth year. View the chart on page 7 of SSA Publication 05-10024 to learn what your specific full retirement age is.
3. Marriage Doesn’t Restrict Your Social Security Benefits
You and your spouse can claim Social Security benefits separately and individually, said Christopher Liew, a CFA charter holder and creator of Wealthawesome.com.
But both of you must have worked previously and you must have distinct service records.
“That means if you have a claim of $2,000 monthly and your spouse has a claim of $1,500 monthly, then your total retirement benefits should reach $3,500 monthly instantly,” he said. “Surprisingly, you are not limited to receiving 50 percent of your spouse’s pension.”
4. If You’re Eligible for 2 Benefits, You’re Generally Paid the Higher Rate
If you’re married, you may be eligible for one-third to one-half of your spouse’s Social Security payment. This is good for women with a low employment record.
However, you will likely only receive the benefit with the highest rate – not both. That’s why most working women in retirement receive their own Social Security pension, not their spouse’s.
“The Social Security payment paid to you as a spouse will be the higher sum between your spousal Social Security benefit and your Social Security benefit, respectively,” Liew added. “You can’t have both.”
5. Working During Retirement Can Decrease Your Social Security Payouts
You’re entitled to receive a decreased amount of your Social Security payments at 62. But if you opt to remain working while getting those benefits, the SSA will lower your payouts by $1 for every $2 you make beyond the annual maximum, which is $19,560 in 2022.
If you keep working in the year you reach full retirement age, the SSA will lower your benefits by only $1 for every $3 you earn over the yearly maximum ($51,960 in 2022). After that year, you will not have your benefits cut this way.
6. Widows May Receive Their Spouse’s Social Security Benefits
At 60 years old, a widow can collect 71 percent of her deceased spouse’s benefits. This number jumps to 100 percent after a widow reaches full retirement age.
If you were living with your spouse when they died, you may be eligible to receive a lump payment of $255 from the SSA.
7. If You’re Divorced, You May Still Be Eligible for Your Ex’s Benefits
You might think that after you’re divorced, you lose all the financial benefits that come with marriage. But when it comes to Social Security, that’s not necessarily the case.
If you and your ex-spouse were married for at least 10 years and you’re currently unmarried, you may be able to get benefits based on their work. (This doesn’t lessen the benefits they receive.)
“Just make sure that both of you weren’t married to someone else at the time of Social Security pension benefit eligibility,” Liew added. “The amount of Social Security pension that you can receive is dependent on the service record of your ex-spouse respectively.”
Some women might sign a decree during the divorce process to waive their rights to their ex-spouse’s Social Security benefits. But the SSA rarely implements these orders.
If your ex-spouse has died, you can still receive benefits based on their job if you’re 60 or older (or 50 if you have a disability) (or 50 if you have a disability).