Women often face unique challenges when it comes to retirement. How can we address these issues in our retirement income planning? These challenges come from several causes, including working less, getting paid less, tax issues and more. Some of these are not unique to women, but others need to be addressed to ensure that the right income plan is created.

First, a congratulations is in order. If you are reading this and you are a woman, your average life expectancy is five years longer than men. However, this means you will need to cover more years of retirement, with the potential of higher total health care costs and a greater likelihood of being widowed.

Unfortunately, you might have less in retirement savings than men because you took time off to be a primary unpaid caregiver, or you simply earned less due to the wage gap. We often see that before a plan gets established, the first action some take in retirement is to file and receive Social Security. Recent research has shown that more women are filing later. However, one-third are still filing as soon as possible, locking in reduced benefits for life. By simply delaying filing for Social Security, you could increase an annual benefit by as much as 77%. Once you have started your benefits, it is very hard to stop, pay back, and restart. It can be done in the first year, in general, but we want to make sure you have planned it out.

Working longer is also a great way to increase your Social Security benefit by an average of 8.6% per year, as well as helping save more, draw less from retirement accounts and maintain employer-provided health insurance.  All of these will lower the costs and pressure on your portfolio.

In addition to maximizing your own Social Security benefits, you should be aware of spousal, survivor and divorce benefits, as the filing decision of a spouse or former spouse can impact both of them. For example, survivor benefits allow widowed spouses to inherit the higher of the two benefits for the rest of their lives.

Working with financial professionals can also increase your probability of success. They will think about how to maximize income from your assets in the most efficient way possible. They’ll show you how to create lifetime income, reduce taxes, and possibly increase your legacy.

Sources:

Mortality in the United States, 2014, U.S. Centers for Disease Control and Prevention, December 2015.

LIMRA Retirement income Reference Book, 2015.

Women’s Institute for Financial Education, “Why Women Need Retirement Planning More Than Men Do”, Candace Bahr and Ginita Wall, 2015.

Social Security Administration, Publication No. 05-10312, January 2018.

2018 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds.

Center for Retirement Research at Boston College, “Do late-career wages boost Social Security more for women than men?”, Matthew S. Rutledge and John E. Lindner, November 2016.

https://www.marketwatch.com/story/when-to-claim-social-security-the-age-old-question-answered