Longevity planning

Social Security Strategy for Women

Women face unique Social Security challenges… Advisors can help

New research from Fidelity Viewpoints identifies challenges and barriers women face as they plan to enter retirement. Reprinted with permission. Visit here.

  BOSTON – 03JAN2019 — When you play your cards right with Social Security, you get the most from your benefits. When you don’t, you end up with money left on the table. And because women, on average, outlive men and are more likely, as they get older, to be single and dependent on one income, they need to have a good strategy for Social Security, which can play out differently for women than for men1:

– Women age 65 or older have an average annual Social Security income of $12,587, compared with $16,590 for menAlmost 49% of elderly unmarried women rely on Social Security benefits for 90% or more of their income

– In contrast, Social Security benefits provide only 35% of the income of unmarried elderly men, and only 30% of the income of elderly couples

Keep the following in mind to optimize your Social Security strategy:

Timing: It can pay to delay

The biggest factor in making the most of your Social Security benefits is deciding when to take them.

You can start receiving reduced benefits at age 62, rather than waiting until your full retirement age (FRA), which ranges from 65 to 67, depending on your birth date (See your full retirement ageOpens in a new window).

  • If you take Social Security benefits before your FRA, the amount of your monthly benefit payment will be reduced.
  • If you delay collecting benefits beyond your FRA, the amount of your monthly benefit will increase monthly until you reach age 70.

To strategize timing around taking Social Security, consider factors such as family longevity, how much money you’ll need for retirement, and other income sources.

If you can delay taking benefits until your FRA or age 70, and you live into your 80s or 90s, you could benefit from doing so. If you have a savings shortfall, consider delaying retirement by a few more years or working with an advisor to create an income bridge from savings or other assets.

Bottom line: If you’re in good health and have sufficient savings, it may be better in the long run to wait until your FRA or longer to begin taking Social Security.

Investing for the future

According to Fidelity’s 2018 Women and Investing Study2, only 29% of women see themselves as investors—but to build financial security in your golden years, it helps to think like an investor and to strategize about Social Security.

“When it comes to planning their retirement income, some women could be doing a lot better,” says Ann Dowd, CFP®, a vice president at Fidelity Investments. Fidelity’s study found that 56% of women are not investing outside of retirement, and may be leaving money on the sidelines by keeping it in cash.

Dowd adds, “Women who claim Social Security at the earliest possibly age of 62 may be leaving money on the table. For every year you delay claiming Social Security past your FRA, you increase your annual benefit by 8%— a guaranteed source of income that is also adjusted for inflation over time.”

Claiming a spouse’s benefit

Your marital status also plays a significant role in your benefits strategy:

Married women may have the option of claiming benefits based on their own work record or 50% of their spouse’s benefit. For couples with big differences in earnings, claiming the spousal benefit may be better than claiming your own.

Divorced women may be able to receive benefits on their former spouse’s record—even if the spouse has remarried!—but only if: the marriage lasted 10 years or more; the claimant is unmarried and age 62 or older; the former spouse is entitled to Social Security retirement or disability benefits; and the benefit you’re entitled to receive based on your own work is less than the benefit you’d get based on your ex-spouse’s work.

Widowed women are eligible to receive their late spouse’s Social Security payment as a survivor benefit, provided it’s higher than their own monthly amount. The surviving spouse can claim the higher monthly benefit for the rest of their life. So, for a couple with at least one member who expects to live into their late 80s or 90s, deferring the higher earner’s benefit may make sense. If both members of a couple have serious health issues and therefore anticipate shorter life expectancies, claiming early may make more sense.

Get Social Security, keep working

You can collect Social Security even if you are still working or earning self-employed income—with a few important caveats:

  • If you collect before your FRA, you can earn up to $17,040 in 2018 without any impact on your benefit.
  • If, however, you exceed the earnings limit before your FRA, your benefits will be reduced by $1 for every $2 you earn over $17,040. In the year in which you reach FRA, $1 is deducted for every $3 you earn above $45,360 (the limit in 2018).
Women who claim Social Security at the earliest possibly age of 62 may be leaving money on the table. For every year you delay claiming Social Security past your FRA, you increase your annual benefit by 8%— a guaranteed source of income that is also adjusted for inflation over time

Once you reach FRA, there is no penalty for working and claiming Social Security at the same time, and your benefits will not be adjusted for earned income. Also, once you reach FRA, the benefit would be adjusted up to account for benefits withheld due to earlier earnings.

However, that’s only part of the story. If you continue to work, you don’t have to live on your savings, and it gives you the opportunity to keep building retirement savings. Keep working and you can contribute to a 401(k) or other tax-deferred workplace savings plan, or an IRA. Lastly, you can also make catch-up contributions into your 401(k) or IRA, which allows you to set aside larger amounts of money for retirement.

Tip: Your Social Security benefit is based on your top 35 years of qualifying income. If you have been out of the workforce for a number of years—say, to raise a family—or you expect to rely heavily on Social Security in retirement, consider working a few extra years, which can lead to additional savings and greater retirement assets.

Make leaving your job its own decision

Although some 39% of women claim Social Security early at age 62,3 it may not be the best financial decision for them longer term. “Many women make the mistake of coupling their decision to leave the workforce with their Social Security claiming strategy,” says Ann Dowd.

“By age 60, you may decide it’s time for a change after many years of working and raising your family, but don’t think about Social Security as a way to quit your job early,” she advises. “Make leaving your job its own decision. The good news is that you may have more resources available to you than you think. You may be able to delay claiming Social Security, especially if your husband or partner is still working.”

Dowd suggests women look at the big picture and think about the future. “You still have options in your 60s, so don’t leave too much money on the table. Remember, you’ve still got a lot more great years ahead of you and fulfilling things to do in retirement. But by the time you get into your 80s, you have fewer financial options, so don’t jump at the first opportunity to claim Social Security at age 62 just because you really want to quit your job,” she adds.

Develop your strategy

According to Fidelity’s 2018 Women and Investing Study,2 women of all ages say they’re looking for opportunities to make their money work harder, with nearly three-quarters (72%) of women saying they want to take steps within the next 6 months to help make their savings grow.

That spirit can apply to taking Social Security benefits. Take the time to understand exactly how much income Social Security will provide for you at different ages. Use our Social Security calculator to estimate your future benefits based on different scenarios, then create a retirement income strategy that can help maximize your monthly Social Security payments.




1. Social Security Administration, Social Security is Important to Women, June 2015.
2. Fidelity’s 2018 Women and Investing Study was conducted online between Sept. 7-18, 2018, among 1,172 American women ages 21+. All respondents were employed and actively contributing to an employer-sponsored retirement plan such as a 401(k), 403(b), 401(a) or 457, with an income of $50,000+. For comparison, 300 American men with the same criteria were surveyed. Fidelity Investments was not identified as the sponsor, and the survey was conducted by market research firm CMI.
3. Social Security Administration, Table 6.B5.1 from SSA annual statistical supplement 2016Opens in a new window.
The tax and retirement planning information contained herein is general in nature and should not be considered legal or tax advice. Fidelity does not provide legal or tax advice. This information is provided for general educational purposes only and you should bear in mind that laws of a particular state and your particular situation may affect this information. You should consult your attorney or tax advisor regarding your specific legal or tax situation. This information is for educational purposes only.

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