{"id":3196,"date":"2013-08-07T17:09:18","date_gmt":"2013-08-07T21:09:18","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=3196"},"modified":"2013-09-23T09:25:11","modified_gmt":"2013-09-23T13:25:11","slug":"husbands-are-shrinking-wives-social-security","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=3196","title":{"rendered":"Husbands Are Shrinking Wives’ Social Security"},"content":{"rendered":"

\"forbes\"<\/a>Two days ago, I was sitting on a bench overlooking the Atlantic Ocean watching sizable waves smash onto the sandy beach and talking to a recently retired friend about, no kidding, Social Security.<\/p>\n

My friend is the sort of guy who pays attention to his finances, but as he was mapping out his retirement scenario before leaving his job, he wrestled with\u00a0when to start taking Social Security benefits<\/a>.<\/p>\n

Your \u2018Full Retirement Age\u2019<\/strong><\/p>\n

At 67, he was already past what Social Security calls \u201cfull retirement age<\/a>,\u201d which is 66 for most boomers. (The size of your Social Security benefits are reduced if you claim them between 62 and your full retirement age; you\u2019ll get just 75% by claiming at 62. The checks grow by 8% a year for every year you delay receiving the money between your full retirement age and age 70.)<\/p>\n

(MORE:<\/strong>\u00a0Women Get Bum Advice on Social Security<\/a>)<\/p>\n

When my friend called Social Security to ask what he should do, he was advised to \u201cdo the math.\u201d So he did \u2014 and decided to sign up immediately.<\/p>\n

I wish I\u2019d asked him whether he considered the financial repercussions of this decision for his wife of roughly 40 years.<\/p>\n

How Men\u2019s Claiming Decisions Hurt Women<\/strong><\/p>\n

Too often, men don\u2019t \u2014 and their wives pay a price.<\/p>\n

According to a\u00a0study on Social Security claiming decisions<\/a>\u00a0of nearly 14,000 older couples by Federal Reserve Board economist Alice M. Henriques, most married men think solely of themselves when choosing the date they\u2019ll start filing for Social Security benefits.<\/p>\n

If they delayed receiving benefits, the men would provide their wives with more income if widowed. But Henriques found that husbands showed nearly \u201cno response to the large incentives\u201d for postponing their start date. As a result, she wrote, men are reducing their wives\u2019 lifetime benefits.<\/p>\n

That\u2019s because many married women are still financially dependent on their husbands in their 60s and beyond, even though women have increasingly stormed the workplace, the gender wage gap is shrinking and\u00a0more women are becoming savvy about money<\/a>. Husbands typically work more years than their wives (due to their time off for maternity leave and child rearing) and earn more money. As a result, when it comes to Social Security, most married women end up relying on the program\u2019s spousal and survivor benefits.<\/p>\n

But here\u2019s the tarnished gold in Henriques\u2019 digging, in my opinion: Almost half of men claim Social Security benefits as soon as they are eligible \u2013 at 62. A quarter wait until age 63 \u2013 65 and fewer than 5 percent start taking Social Security after turning 65, according to her research.<\/p>\n

(MORE:<\/strong>\u00a0Social Security Secrets You Need to Know<\/a>)<\/p>\n

So how much money is left on the table as a result of early claiming?<\/p>\n

About 20% of couples give up at least $5,000, Henriques says; an additional 5% or so lose at least $20,000.<\/p>\n

Why Couples Must Decide Together<\/strong><\/p>\n

The need for couples to assess their claiming decisions jointly is why analyst\u00a0Larry Kotlikoff, writing on the PBS NewsHour website<\/a>, recently told a married 67-year-old terminal cancer patient not to take his benefits right away.<\/p>\n

If he survives to 70 and delays claiming Social Security until then, Kotlikoff said, his wife will receive a 24% higher survivor benefit check every month.<\/p>\n

\u201cYour decision about when to take your own retirement benefit will impact what your spouse and, indeed, your ex-spouses to whom you were married for 10 years or more, will receive in survivor benefits,\u201d Kotlikoff wrote.<\/p>\n

Unquestionably, when to start the monthly checks flowing from Social Security is a mind-twister for women and men. And there\u2019s no perfect age for everyone to start collecting benefits, since the best timing for you will depend on such factors as your health, employment history and savings.<\/p>\n

But making wise choices can translate to a difference of thousands of dollars during your lifetime, so it\u2019s worth studying up on this subject. One thing worth remembering: delayed filing can be especially beneficial for women, who tend to outlive men and run a higher risk of falling into poverty at advanced ages.<\/p>\n

Many Are Confused About the Claiming Rules<\/strong><\/p>\n

Unfortunately, as columnist\u00a0Mark Miller wrote in a recent Morningstar post<\/a>, most people don\u2019t seem to understand the relationship between the age you can begin claiming benefits and the size of those benefits.<\/p>\n

For example, he noted, 56% of men and 63% of women filed for benefits sometime before their full retirement age in 2011 (the most recently available data). By waiting until 70, however, they could have received 132% of their full retirement age benefit.<\/p>\n

Out of curiosity, I decided to see how my own Social Security benefits might differ depending on when I began taking them. After running some numbers on the\u00a0AARP Social Security calculator<\/a>, I learned that I\u2019d receive nearly $1,000 a month more by waiting until age 70 than by starting at 62. Since I\u2019m married and my husband is seven years older, he should apply at 70 for his own Social Security benefits. I\u2019d apply for spousal benefits at 67 and then apply for my own at 70.<\/p>\n

Where to Get Smarter About Social Security Benefits\u00a0<\/strong><\/p>\n

Now it\u2019s your turn. Here are a few places to help you \u2013 and your spouse or partner \u2013 decide when to claim Social Security:<\/p>\n

Visit a Social Security Administration office.<\/strong>\u00a0The\u00a0Social Security website<\/a>\u00a0can pinpoint the nearest location. When you go to one of the offices, a staffer can show you how much your benefits would total depending on when you begin taking them. But he or she is not permitted to offer advice.<\/p>\n

Check out online tools.<\/strong>\u00a0Start by reading\u00a0Social Security\u2019s guide to benefits on Next Avenue<\/a>. Also, check out\u00a0Kotlikoff\u2019s \u201cHow to Avoid Making Social Security Mistakes\u201d<\/a>\u00a0and Forbes executive editor Janet Novack\u2019s \u201cThe Big Decision: When to Take Social Security<\/a>.\u201d<\/p>\n

Other great sources of information include\u00a0AARP\u2019s Social Security Q&A tool<\/a>,\u00a0the \u00a0Social Security Choices\u00a0<\/a>website\u00a0and Miller\u2019s site,\u00a0RetirementRevised.com,<\/a>\u00a0which has frequently asked questions about spousal and survivor benefits.<\/p>\n

For an answer to a particular question about your situation, try\u00a0Ask Mary Jane<\/a>, a free online service from the National Committee to Protect Social Security and Medicare.<\/p>\n

Once you\u2019re well versed, get your\u00a0Social Security benefits statement online<\/a>.\u00a0It\u00a0estimates how much you\u2019ll receive based on your earnings history. You\u2019ll be able to see amounts calculated on alternate filing dates, but you won\u2019t be able to get the scoop on spousal or survivor benefits. (I recommend checking your Social Security statement online annually; I do it around my birthday.)<\/p>\n

Next, use a good, free online calculator or two to run \u201cwhat if\u201d scenarios. I like the\u00a0T. Rowe Price Social Security Benefits Evaluator<\/a>\u00a0and\u00a0AARP\u2019s Social Security Benefits Estimator<\/a>\u00a0because they let couples see figures using a range of variables.<\/p>\n

Sure, this will take a little time. But a little effort now could make a huge difference in your future financial security.<\/p>\n

\"Kerry<\/a>Kerry Hannon<\/a>,\u00a0Contributor<\/p>\n

Kerry Hannon has spent more than 25 years covering personal finance for Forbes, Money, U.S. News & World Report and USA Today. Her website is\u00a0kerryhannon.com<\/a>. Follow her on Twitter\u00a0@kerryhannon<\/a>.<\/em><\/p>\n

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