Social Security for Women: What to Know

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March 21, 2019

Whether you're a woman or a man, single or married, widowed or divorced, retiring early or late—the Social Security choices you make may have a significant impact on your retirement income. Different approaches can result in thousands of dollars in benefits gained—or missed—over the course of your retirement.

And even though the Social Security rules for women and men are the same, your strategy doesn't have to be. Here's why.

Social Security Impacts Men and Women Differently

Social Security still has an unequal impact on women and men, for the same basic reasons today as in 1972:

  1. Women earn less, often with large discrepancies between their and their spouses' salaries.
  2. Women live longer, with the potential of spending extra years in retirement after the death of a spouse.

Social Security Bulletin from 1972

IN SUMMARY, social insurance has an uneven impact upon women and men. In part the differences result from economic and demographic factors outside the social security system, such as women's lower earnings and longer life expectancy. In part also, they result from the diversity of women's roles as workers, wives, widows, and mothers.

"Women and Social Security in the United States," Lenore E. Bixby, Bulletin, September 1972, .

Women Earn Less…

Most estimates put women's pay at around $0.80 for every dollar a man earns. That equates to median earnings of about $39,000 for women versus $50,000 for men.1

Additionally, women are also more likely to leave the workforce (permanently or temporarily) to care for children or other family members, further slowing their earnings growth. The lifetime pay gap between men and women results in a gap in Social Security as well, since lower earnings equals fewer in benefits.

…and Rely More on Social Security

Women are also less likely to be covered by private retirement plans or have pensions and are more dependent on Social Security benefits—even though their benefit amounts are lower.

Elderly women are the most dependent; only 45 percent of unmarried women over 65 receive income from a private pension (either as a former worker or as a survivor).1

STRATEGY: Make the Most of a Spouse's Salary Differences

The pay gap between spouses matters for Social Security more than you'd think. When there's a large discrepancy in income, one spouse can delay filing to maximize benefits for both.

In this example scenario, Kathy files for early benefits starting at age 62, and Sam maximizes his benefit by waiting until age 70. Then, Kathy can file for spousal benefits later and increase her own benefit.

This also allows her to maximize survivor benefits if she lives longer than Sam.

Kathy's full retirement age is 66 and her full benefit is $700 per month. Her spouse Sam's full retirement age is also 66, and his full benefit is $2,400 per month. In this scenario, Kathy files early at age 62 for reduced individual benefit of $525 per month. Sam waits to file past his full retirement age, until age 70 to maximize his individual benefit. Waiting raises his monthly benefit to $3,168 per month. At the same time, Kathy collects a spousal benefit of $500 per month, bringing her total monthly benefit to $1,025. When Sam passes away, Kathy switches her benefits to a survivor benefit of $3,168 per month.

The filing strategy utilized above represents an example of early filing combined with late filing to increase Social Security benefits. Results may differ depending on an individual's earnings history. Source: American Century Investments,

STRATEGY: Take Advantage of Spousal Benefits—Even after a Divorce

Former spouses are eligible for benefits based on an ex-spouse's income (if age 62 or older and unmarried, and the marriage lasted at least 10 years). In fact, if they've been divorced at least two years and are both working to age 62, one ex-spouse can receive benefits even if the other is still working.

Women Live Longer…

On average, women turning 65 today can expect to live another 21 years. For men, that number is about 19 years.2 Women are also twice as likely to live to age 100 (10 percent versus 5 percent chance).3

…and Spend More Time in Retirement

Not only do women live longer, but they're often younger than their husbands when they get married. That means women may live an average of four extra years in retirement without their husbands.

Husbands are two years older than their wives, on average. Life expectancy for women is two years longer than men. Added together, the surviving female spouse may live an additional four years in retirement.

Sources: Social Security Administration Life Expectancy Calculator, U.S. Census Bureau. Current Population Survey, 2016. HealthView Services 2017 Retirement Health Care Costs Data Report.

STRATEGY: Use Survivor Benefits

Women may rely on survival benefits more than men due to the longer potential retirement length and lower individual benefit amounts.

Surviving spouses receive the higher of either their own benefit or their deceased spouse's benefit. The couple must have been married for at least 9 months, and generally, the survivor must be at least 60 years old.

STRATEGY: Plan for Retirement as a Couple

What can you do to ensure your money covers expenses for both spouses deep into retirement? Make your plan as a couple rather than as individuals and take steps to account for life expectancy differences.

Plan for Longevity as a Couple

Chart showing the chances of living past 65 for Sam, Kathy or their probability together. Sam's chance of living to age 75 is 84%. Kathy's is 89%. Together, they have a 98% chance that at least one of them will make it to age 75. Sam's chance of living to age 85 is 55%. Kathy's is 65%. Together, they have an 84% chance that at least one of them will make it to age 85. Sam's chance of living to age 95 is 17%. Kathy's is 26%. Together, they have a 38% chance that at least one of them will make it to age 95.

Source: American Century Investments, 2019. Society of Actuaries and American Academy of Actuaries , March 2019.

Remember, Social Security Is Just One Part of Your Retirement Plan

Even if you use strategies to maximize your benefits, Social Security may only replace about 40 percent of your past earnings. Make sure you have an investment plan that can complement your Social Security income.

Contact an Investment Consultant to learn more about creating a comprehensive retirement plan.

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      1 "Social Security Is Important to Women  ,", September 2018.
      2 Life Expectancy Calculator ,, March 2019.
      3 Society of Actuaries, .

      The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.