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Women and Social Security: 4 Ways to Maximize Your Benefits

Rebekah Barsch •  December 15, 2015 | Focus on Women, Enjoying Retirement


As they near retirement, most people will need to make a choice about how and when to apply for Social Security benefits. For women, the decision will be particularly critical. Because they tend to live longer than men, women's retirement income may need to stretch for 30 years or more. Yet at the same time, they may receive lower Social Security benefits because they've earned less during their working years or have taken time away from work to care for children or aging relatives.

For all these reasons, it's especially important for women to understand how to maximize their Social Security benefits for the long term. When I talk with women about getting the most from Social Security, here's what I suggest:  

1. If you're working, make sure you work long enough to qualify for benefits. To qualify for benefits based on your own work record, Social Security requires that you earn what it calls 40 “credits” of income over the course of at least 10 years. In 2015, a credit is equal to $1,220 in earnings. You can earn no more than four credits per calendar year, which means you'll need to have at least 10 years of earning history to qualify for benefits. However, the credits do not have to be earned consecutively. So if you choose to leave the workforce to raise children or care for a family member before you've reached the 40-credit minimum, you can return to the workforce later to make up the difference.

2. When you're ready to retire, delay claiming benefits if you can.  Getting money now always sounds better than getting money later. But the last thing you want—especially if you're a woman and in good health—is to lock in a lower Social Security paycheck for what could be a very long retirement. So while you may be eligible for Social Security as early as age 62, consider delaying the start of your benefits if you have other income sources you can rely on during the early years of retirement. If you choose to take your benefit early (before your full retirement age), your benefit will suffer a permanent reduction. Additionally, for each year you delay taking Social Security between the ages of 66 and 70, your benefit will increase by eight percent through what are called delayed retirement credits (DRCs). That's a pretty good return on investment these days.

When I talk with people about waiting to take Social Security, I'm often asked, "If I do wait, how long would I have to live for the strategy to pay off?" The answer is: Not as long as you might think. For a worker who delays the start of benefits from age 62 to 66, the break-even (or crossover) age would be about 78. For a worker who delays the start of benefits from age 66 to 70, the crossover age is around 82½. If you live beyond those crossover ages, you'll end up getting more from Social Security by delaying your claim.

3. Consider taking advantage of spousal strategies. If you're currently married or have been married, you may be able to increase your Social Security benefit by taking advantage of one of three spousal strategies.  

The Spousal Benefit

The spousal benefit gives you the option to receive either your own Social Security benefit or one-half of your spouse's benefit, whichever is greater.

  • If you are currently married: You can claim a spousal benefit beginning at age 62, as long as you have been married for a period of one year and your spouse has filed for his or her Social Security.
  • If you are currently divorced: You can claim a spousal benefit beginning at age 62 based on the work record of your ex-spouse if you meet three criteria: You were married to him for at least 10 years, you are currently unmarried, and your ex-spouse is at least age 62.
  • If you have been widowed: You can claim a  survivor benefit beginning at age 60 based on the work record of your deceased spouse as long as you were married for at least nine months before he died. 

There are two additional claiming strategies available to married couples that also have the potential to increase monthly Social Security income, although the window of opportunity to take advantage of them is closing rapidly. The Bipartisan Budget Act of 2015, signed in November by President Obama, essentially eliminates the “file and suspend” and “claim now, claim more later” strategies, which means you can take advantage of these strategies only for a limited time.

Social Security Whitepaper

File and Suspend

Under the file and suspend strategy, a higher-earning spouse can file for Social Security at full retirement age (currently age 66) and suspend receipt of benefits until age 70 to earn DRCs. The lower-earning spouse can then file for spousal benefits. By filing and suspending, the higher-earning spouse’s benefit will continue to grow and earn delayed retirement credits while allowing the spouse to claim a spousal benefit. 

To use this strategy, the person who files for benefits—and then suspends them—would need to be at least age 66 and would need to act by April 30, 2016, and his or her spouse would need to be at least age 62.

Claim Now, Claim More Later

In this strategy, the lower-earning spouse can apply for his or her own benefits and the higher-earning spouse, who is at full retirement age, claims a spousal benefit. By claiming spousal benefits, the higher-earning spouse delays receipt of his or her own benefits, earning DRCs while collecting a check from Social Security each month. And when the higher earner reaches 70, he or she can switch to his or her own worker’s benefits, which have increased through DRCs over time.

Only individuals age 62 or older (born in 1953 or earlier) by December 31, 2015, are still able to utilize this strategy.

4. Make your decision within the context of your overall retirement income plan. When it's time for you to choose how and when to claim Social Security, don't make the decision in a vacuum. Think about it in the context of your overall plan for funding retirement. For example, if you want or need to continue working past age 62 and you choose to take your Social Security benefit early, you'll be limited in how much you can earn. Or, if you have other sources of retirement income such as a 401(k) or IRA you can rely on in the short term, it may pay to hold off on claiming Social Security to let your benefit grow.

Social Security isn't a one-size-fits-all benefit, and some of these strategies can be quite complex. So talk with a financial professional before you apply for benefits to make sure you're setting yourself up to get the most money possible.

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