Social Security Claiming Strategies For Single, Divorced & Widowed Women
By Angela Dorsey
Social Security has been around for a long time and was designed in a different time for a different generation. At its inception in the 1930s, Social Security had the traditional family—and the traditional family only—in mind. But family dynamics have dramatically changed since then, and women’s roles in the home and workforce look drastically different.
Today’s modern woman works full time, earns less than her male counterparts, lives longer than they do, and steps up as a caregiver when elderly parents and young kids need her most. Less pay, longer life spans, and shorter time in the workforce means women should carefully consider how and when they claim Social Security so they don’t get short-changed later on in life.
But the stakes are even higher for single, divorced, and widowed women. Nearly 50% of older, single women get at least 90% of their income from Social Security, compared to only 21% of married women. (1) This statistic shows that single women are more dependent on Social Security than any other population. If you fall into this group, this is what you need to know about claiming your benefits.
For The Single Women
Many women make the mistake of claiming Social Security as soon as they’re eligible. Few wait until full retirement age, and even fewer wait until age 70. But your benefit amount increases by 8% each year from age 62 to 70, so it pays to wait.
For example, let’s say your full retirement age is 66 and your monthly payment is estimated to be $2,000. The chart below shows how much you’d get every month if you started collecting at age 62 (reduced benefits), 66 (full benefits), and 70 (increased benefits).
Just by waiting until age 70, your monthly payout increases by a whopping 32% each month, which could lead to thousands of more dollars over the course of your retirement. (2)
But when you should claim benefits isn’t as simple as waiting until age 70. Your health, home, and personal circumstances could indicate otherwise. Maybe you find out you have advanced-stage breast cancer, so you start taking benefits at age 62. Or maybe you are in good health, so you use other accounts to fund retirement while you wait until age 70. Tailoring your claiming strategy to your unique life circumstances is key, and a professional can help you take all factors into account.
For Those Who Are Divorced
This may come as a surprise, but divorcées can claim their ex-spouse’s benefits as long as they were married at least 10 years. The amount you receive is equal to 50% of your ex’s benefits. If you qualify for your own benefits, you either receive 100% of your benefit amount or 50% of your ex’s, whichever is higher. (3)
If your ex passes away, you receive benefits as a widow, which means you get 100% of your ex’s payout. The best part? Your ex never has to know you’re collecting spousal benefits. Social Security doesn’t notify them and you’re not required to reach out. There is one caveat to this rule, however. You won’t qualify for spousal benefits if you remarry. Your ex can, but you can’t. Although, if you happen to remarry and your second marriage ends in divorce or your spouse dies, you’d once again be eligible for your first spouse’s benefits.
For The Widows
Widows and divorcées who were married for at least a decade are eligible for survivor benefits when a spouse dies. Just keep in mind that you won’t qualify for survivor benefits if you remarry before age 60.
As with regular Social Security payouts, you receive reduced benefits if you claim them before you reach full retirement age. But unlike regular payouts, you don’t have to wait until you’re 70 to get the highest amount.
The chart below shows what percentage of survivor benefits you’d get based on your situation: (4)
Don’t Go It Alone
Social Security is a complex system with many moving parts, but don’t let that intimidate you! By planning early and choosing a claiming strategy based on your unique situation, you can make sure you maximize your benefits. At Dorsey Wealth Management, we are here to help. Whether you need help developing a brand-new financial plan or you just want to know more about Social Security, schedule a free introductory 30-minute phone call to get started.
Angela Dorsey is the founder and fiduciary financial advisor at Dorsey Wealth Management, a fee-only financial planning firm helping successful women and couples prepare for retirement. Angela earned a BS in computer science from Loyola Marymount University, an MBA from UCLA Anderson School of Management, and spent 20 years as a Senior Compensation Specialist in large corporations before becoming a Certified Financial Planner™ (CFP®) and a Registered Investment Advisor (RIA). That background gave her the tools to couple with her passion for empowering women to make the best financial decisions possible. Angela lives in Torrance, California, with her husband and two children. She enjoys spending time at the beach or surrounded by nature. To learn more about Angela, connect with her on LinkedIn.