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Married and Single Women Face Different Choices When Claiming Social Security Benefits, Finds Journal ArticleDENVER, CO -- Deciding when to begin claiming Social Security retirement benefits is often a difficult decision if one wants to maximize benefits. But it’s particularly difficult for women, concludes an article in the June 2007 issue of the Journal of Financial Planning, published monthly by the Financial Planning Association® (FPA®). “Single women and married women face very different choices,” write Alicia H. Munnell, director of the Center for Retirement Research at Boston College in Boston, and Mauricio Soto, a researcher at the Center. Single women usually should delay claiming, while for married couples “wives should claim early and the husband should delay claiming.” Many people claim at the earliest available age, 62, often because they can’t afford to wait. But claiming early decreases the size of monthly payments. Thus, workers with a longer-than-average life expectancy under Social Security’s actuarial tables usually collect more in total lifetime benefits if they wait to claim until normal retirement age or later because they’ll receive larger monthly payments. For women, the decision is more complicated, however. They typically live longer than men and the average life expectancies published in the Social Security actuarial tables. That would suggest that most healthy women should delay the start of their benefits. For a single woman this makes sense. But not necessarily if you’re married, contend the authors. First, married women tend to earn less than their husband. They also tend to be younger, yet they typically retire when their husband does, thus shortening their working years and leaving them with even smaller personal Social Security benefits. The decision of when to start benefits at that point should depend on the amount of their own Social Security benefits and their age relative to their husband’s age. For example, say the authors, assume the wife’s earnings will produce monthly benefits at least equal to 40 percent of her husband’s benefits (but not as great as his benefits). This occurs in about half of all marriages. She should claim as early as possible. Why? Because she’ll collect her own benefits only until her husband dies, at which point she’ll collect the larger survivor’s benefits, which are 100 percent of what her husband was receiving. (If her benefits were higher than his, it would benefit her to delay collecting her own to maximize them, just as would be the case for a single woman.) In this situation, it usually pays off for the couple if the husband delays claiming the benefits, even if he has only a normal life expectancy—ideally claiming as late as age 69. This maximizes the couple’s lifetime benefits because the “delay of claiming by the husband increases the value of the survivor’s benefits more than it reduces the man’s own benefit because of his lower life expectancy,” conclude the authors.
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