It can be tempting to take Social Security as early as possible—and that’s just what many Americans do.
Of men born in 1943 and 1944, 32% signed up for retirement benefits at the minimum age of 62, according to the Social Security Administration. The percentage of women, 38%, was even higher.
But as you may know, those who take Social Security as early as possible receive less in benefits. A worker who taps his benefits at age 62—rather than the full-retirement age of 66—will sacrifice 25% in benefits each month. Ultimately, he’ll receive 44% less than he would if he had waited until the maximum claiming age of 70.
Clearly, it’s advantageous to wait as long as possible before claiming your benefits. It can be even more important for men to wait if at all possible. Why? Because doing so will leave their spouses in a stronger position should they spouses become widows.
A husband pre-deceasing his wife is not some abstract possibility. The average U.S. male has a life expectancy of 76, compared with 81 for the average woman. In 1999, the U.S. Census Bureau reported that nearly 700,000 women lose their husbands each year, and will be widows for an average of 14 years.
This is precisely why men’s Social Security election choices are so important. Men are usually the higher earner within a relationship, and Social Security benefits are based on earnings history—which means a husband’s benefits typically do the heavy lifting for a couple.
Remember that spousal benefits are 50% of the breadwinner’s benefit amount, and widows are entitled to collect 100% of their late spouse’s benefits. Thus, a man who fails to maximize his Social Security benefit can leave his widow in a bind as a result.
It’s especially important for widows to have as much income as possible because as a group they are more vulnerable to poverty. A study by the National Institute on Retirement Security found that women are 80% more likely than men to live in poverty at some point during their retirement.
Having a couple’s higher earner delay Social Security benefits until full retirement age can help to prevent that scenario. So can a step such as buying life insurance to provide income replacement. Still, the best approach to ensuring financial security is to create a comprehensive financial plan.
These plans allow couples to prepare for a range of scenarios, including the death of a spouse, and put in place solutions that will create financial security should the worst come to pass.
While no one likes to envision leaving a widow behind, or becoming a widow, making sure a surviving spouse will be financially secure is an act of responsibility and caring. Don’t hesitate to contact us if you’d like to learn more.
