Slightly more than half of women 65 and older rely on Social Security for three-quarters of their income, according to the Employee Benefits Research Institute. Choosing when to start taking benefits—a decision that can be affected by factors like health, savings and other sources of income—is complex even for pros.
As we age, planning for longevity includes many important decisions and compromises. The timing of these plans when it comes to Social Security is often misunderstood, especially for married couples when one spouse outlives the other. And since statistically women live longer than men, the ladies in our lives should pay close attention to the details of their plans.
The title of a recent article in MarketWatch says it all - “Widows getting cheated out of Social Security.”
The longevity calculus is oftentimes missing as it concerns women who rely on Social Security. Especially amongst earlier generations, wives may be more reliant upon their spouse’s Social Security and, therefore, on their spouse’s work history. This is almost a given if the wife was a homemaker.
If the married couple begins taking Social Security early, then it may adversely affect the spouse who did not work outside the home (or worked for a short duration, usually at reduced compensation), but who will survive longer. Even aside from Social Security, this disparity between the sexes is not something that should escape a prudent financial planner’s attention. Unfortunately, this is an easy fact to forget.
In addition to the MarketWatch article, a recent Forbes article titled “Sudden Loss: Financial Advice For Widows” provides some practical pointers to widows and those who advise them.
So make sure you discuss the timing issues with your financial advisor and professional counsel in order to make the right decision for your Social Security benefits.
MarketWatch (August 24, 2012) “Widows getting cheated out of Social Security”
Forbes (August 28, 2012) “Sudden Loss: Financial Advice For Widows”