Fewer savings combined with longer life expectancy elevates the importance of lifelong income for women
November 16, 2015 — COLUMBUS, Ohio–(BUSINESS WIRE)–Eighty-two percent of retired women currently collecting Social Security benefits took them early, locking in a lifetime of lower payments, according to a Nationwide Retirement Institute survey conducted by Harris Poll.
The survey focused on 432 women over 50 who are retired or plan to be in the next 10 years. It found that of the nearly 300 women currently collecting Social Security, only five maximized their monthly check by waiting to claim at age 70. However, waiting as long as possible to claim Social Security means a bigger check, helping retirees live the retirement they hoped for.
“Those waiting to claim Social Security until age 70 can receive up to a 76 percent larger benefit than those who claim at 62 — but less than two percent of women wait,”1 says Shawn Britt, director of advanced consulting at Nationwide. “Women, in general, have to be prepared to live longer and often have to do so with less savings. This makes maximizing Social Security benefits extremely important.”
Looking back, nearly a quarter (24 percent) of women who filed early (between 64 and 66) would change their decision and file later. Many of those who claimed early felt forced to take their benefits in the face of expensive, unexpected retirement realities. Of those who would not change their filing decision, 46 percent say an unforeseen life event compelled them to take it early, while others blamed unplanned health problems (19 percent) or losing their job (11 percent).
Benefit overestimation may bring disappointment in retirement
Often due to strapped budgets, more than a third of women (38 percent) say they can’t do the things they wanted in retirement. Health care expenses keep one in four (25 percent) from affording the retirement they desired.
Almost one in four (24 percent) are also overestimating their Social Security benefit. Women who have yet to collect Social Security on average expect to get $1,457 in monthly benefits. Women nearing retirement also expect their benefit to pay 53 percent of their expenses in retirement.
In reality, even women retirees who were able to wait to collect at their full retirement age report an average monthly payment of $1,376*, while those who started taking Social Security early report receiving just $980.
“With recent legislation changing Social Security rules that allowed many advantageous filing strategies, future retirees will likely end up receiving even less than expected,” Britt says.
Women must be engaged in conversations with financial advisors
Only 17 percent of the women surveyed say they received advice on Social Security from an advisor. However, nine in 10 women (87 percent) who work with an advisor say their Social Security payment was as expected or more than expected.
“One of the key takeaways of our survey is that women need to get professional advice earlier, to ensure they have a plan in place before a life event renders them unprepared and forces them to take it early,” says Kevin McGarry, director of the Nationwide Retirement Institute.
It’s not that women don’t want the advice. In fact, more than three in five women (63 percent) admit that if their financial advisor could not show them how to maximize their benefit — then they would switch to an advisor who could.
“Even though filing decisions based on income need, health and longevity are inherently personal, many women decide to claim Social Security when their husband does,” Britt says. “Whether you are single, married, widowed or divorced, there are a variety of smart filing strategies open to women — but too few are seeking professional advice to take advantage of them.”
Nationwide’s Social Security 360SM program helps advisors find their clients’ optimal Social Security filing options.** The program includes a tool with software that compares all of the election strategies available to married couples, single people, divorced people, widows, government employees and even those who have already elected a strategy.
See how to make the most of your Social Security benefits at www.nationwide.com/socialsecurity.
Advisors can visit www.nationwidefinancial.com/socialsecurity.
The 2015 Social Security Study was conducted online within the U.S. by Harris Poll on behalf of Nationwide between June 15 and June 22, 2015. The respondents comprised a representative sample of 432 U.S. women aged 50 or older who are either retired or plan to retire in the next 10 years. Data are weighted where necessary on gender, race/ethnicity, region, education, and propensity to be online, to bring them in line with their actual proportions in the population.
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s. The company provides a full range of insurance and financial services, including auto, commercial, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; banking and mortgages; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com.
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1 Nationwide Social Security 360 SM Case Study, 2015.
*Low base (n<100); results should be interpreted as directional in nature
**The information provided as part of the Social Security 360 program is provided for informational purposes only and should not be construed as investment, tax, or legal advice or a solicitation to buy or sell any specific securities product. The information provided is based on current laws, which are subject to change at any time, and has not been endorsed by any government agency.