FINANCIAL FOCUS: Women must know what to expect from Social Security

Joe Faulk

Joe Faulk

Published: Thursday, June 26, 2014 at 06:55 PM.

Everyone should be aware of the financial resources they will have available in retirement. But women must be particularly diligent.

That's because women often take time off from their careers to care for children and older parents, so they may accumulate less money in employer-sponsored retirement accounts, such as 401(k) plans. And women still live several years longer than men, according to the Census Bureau.

Consider these key factors:

Age. You can start taking retirement benefits as early as age 62, but your benefits may be reduced by up to 30 percent unless you wait until your “full retirement age" (likely 66 or 67). If you delay taking benefits until 70, your monthly benefits may be up to a third larger than if you started collecting Social Security at your full retirement age. Weigh several factors — such as family longevity, income from employer-sponsored retirement plans and anticipated financial needs — to determine when to start taking Social Security.

Employment. If you work while receiving Social Security benefits before you reach full retirement age, your benefits will be reduced $1 for every $2 you earn over an annual limit, which generally increases each year. In the year you reach full retirement age, your benefits will be reduced by $1 for every $3 you earn over the limit before your birthday. Once you reach full retirement age, your benefits will no longer be adjusted for earned income.

Marital status. As a spouse, you can generally receive Social Security payments based on your own earnings record, or collect a spousal benefit of up to 50 percent of your husband's Social Security benefit. The benefit will be reduced if you start taking it before your full retirement age. To start collecting Social Security spousal benefits, you must be at least 62 years old and your husband must also have filed for his own benefits. If you’re divorced, and not currently married, you can generally receive benefits on your ex-husband’s Social Security record, as long as you meet certain conditions. (For example, you had to have been married to your ex-husband for at least 10 years.)

No matter how much Social Security you receive, it’s almost certainly not going to be enough to provide all the income you’ll need. During your working years, try to contribute as much as you can, for as long as you can, to your IRA and your 401(k) or other employer-sponsored retirement plan. At the same time, look for other investment opportunities. When you reach retirement, create a withdrawal strategy that allows you to stretch out the income you receive from your investments for as long as you can. 

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