Saving for retirement is a challenge many Americans face. But it is a greater struggle for women. Women live longer than men and thus have a greater need for retirement income to cover their living and healthcare expenses. A 65-year-old woman is expected to live an additional 20 years, whereas a 65-year-old man is expected to live only 18 additional years. Because women live longer, they have an increased risk of outliving their retirement savings.
And women earn less over their careers because of the gender pay gap, earning about $0.80 for every $1 a man earns. Less money earned is less money that can be saved for retirement. Women can improve their financial health by learning about saving for retirement and working with a qualified financial professional. In this article, I shine some light on common Social Security misconceptions to help get the most from these hard-earned benefits.
Busting The Top 7 Social Security Myths
Myth #1: SOCIAL SECURITY WON’T BE AROUND
Social Security is replenished by working Americans, interest on US bonds, and taxes on some retiree benefits. Should the existing funds be depleted, future retirees may be paid a portion of the benefits promised, but not zero.
Myth #2: SOCIAL SECURITY IS ALL YOU NEED
While Social Security benefits are adjusted for cost of living increases, they’re intended to supplement, not replace, retirement savings. That’s why it’s important to get the most out of your Social Security claim.
Myth #3: ALWAYS FILE AS EARLY AS POSSIBLE
Filing for your Social Security benefits before your full retirement age (FRA) will begin benefits sooner but reduce the benefit amount, which may not be optimal. Higher-earning spouses often delay benefits to ensure a higher payout for their widow or widower, who would be eligible for 100% of their benefit.
Myth #4: ALWAYS FILE AS LATE AS POSSIBLE
Waiting to file for your Social Security benefits past your full retirement age (FRA) often makes the most sense financially. It could deliver the highest benefits. But, some conditions warrant filing early, particularly if you need the extra income, have health concerns or want the payments during your younger years.
Myth #5: NO WORK EXPERIENCE, NO BENEFITS
Those who haven’t worked for 40 quarters can receive half of what a spouse or ex-spouse would receive (if married over 10 years and haven’t remarried). Women are also more likely to get Social Security “survivor benefits”. That’s when a surviving spouse may be eligible for full benefits on their spouse’s work record. A recent report by the Social Security Administration showed 12 percent of survivor benefits were paid to women, and less than 1 percent were men.
Myth #6: NEVER WORK AFTER FILING
If you file for Social Security benefits early and continue to work, your benefits will be reduced based on your earnings. But those benefits are simply delayed; at your full retirement age (FRA), you’ll receive increased payments to make up the difference.
Myth #7: RELY SOLELY ON ADVICE FROM FRIENDS AND FAMILY
Advice from non-professionals may not maximize benefits. Contact a financial advisor to address each factor as it pertains to your circumstances, and develop a plan to get the most from your Social Security benefits.
Maximizing your claim to Social Security benefits often comes down to making the right choices, which ultimately can lead to a better life in retirement. Women face more challenging retirement circumstances than men, which raises the stakes of busting Social Security myths to get the most from their benefits.