Early Retirement More Costly for Women

Women who retire when their husbands do may be forfeiting more wealth than they realize. Married women overall are still in their peak earning years in their 50s and early 60s. Married men’s earnings often decline as they age, according to economist Nicole Maestas. Maestas is an associate professor of health care policy at Harvard Medical School and the author of a recent study about couples’ income and retirement patterns. She analyzed the University of Michigan’s Health and Retirement Survey of more than 20,000 people 50 and older.

Social Security benefits are based on a person’s 35 highest-earning years. Each additional year an older married woman works it could replace an earlier year when her income was lower or she took time out of the workforce—for instance, to raise children. Because older married men are typically past their peak earning years, the same is not true for them, Maestas found. But women do typically retire at the same time as their husbands, Maestas said. Since women in heterosexual couples typically marry men two or three years older, meaning married women leave the workforce at younger ages. As a result, married women typically sacrifice more Social Security wealth than married men when they retire early.

But there’s more…

Women’s longer life expectancy mean they’re likely to outlive their husbands and are at greater risk of outliving their savings as a result. Women are 80 percent more likely than men to live in poverty after age 65, according to the National Institute on Retirement Security.

People do not have to claim Social Security when they retire, although many do. Thirty-nine percent of women and 35 percent of men in 2017 filed at the earliest age, which is 62, according to the Center for Retirement Research at Boston College. Claiming early locks them into checks that are significantly smaller than if they had waited a few years. It is understandable that not every married woman wants or will be able to keep working. My hope is this will at least prompt couples to discuss their options. That is exactly where I can assist.

As a Certified Social Security Claiming Strategist, I can show you different filing options at different ages with visual aids. This helps you understand the impact of claiming at different times. The age at which you file for benefits as well as how you file impacts your current income, yearly income taxes, retirement planning, plus survivor benefits. Check out our information about Social Security here or book an appointment with me.

Blog Written By: Heather Majka


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