Aging Options

Preparing for the disappearing Social Security advantage

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The Social Security advantage for married women is shrinking. Much of the focus of Social Security and retirement experts concentrates on describing ways to maximize Social Security benefits. The majority of those options realize benefits for a spouse, usually a woman, who didn’t work much if at all, outside the home and therefore saw little to no Social Security benefit of their own. Married women benefitted from this because they could claim on a husband’s benefit whether they were still married, widowed or divorced but of course this also worked for a man that didn’t work outside of the household or who wasn’t the main breadwinner. For women, this has been an important benefit because less than 40 percent of women born in the 30s participated in the labor force when they were between the ages of 24 and 35. Just 30 years later, that percentage rose to 75 percentage for their younger counterparts. The result, according to experts is that while only 44 percent of the older cohort received Social Security benefits based on their own work history, 75 percent of Generation X women will.

At the same time, the marriage rate has also decreased. In the 30s, over 80 percent of women between the ages of 25 to 34 were married and by age 55 to 64, almost 70 percent were married. For Generation X women, fewer than 60 percent married between the ages of 25 and 34. When those same women reach the 55 to 64 cohort, researchers expect that rate to drop to 56 percent.

Overall, women make up about 60 percent of Social Security beneficiaries. Because women still traditionally make less than men make and live for several years longer than men do, the implications for future financial security may be grave. While experts don’t expect women’s Social Security benefits advantage to disappear, it’s likely to become much smaller. While it’s not all doom and gloom, after all, women are working and therefore building up their own benefits, it’s worth noting that women, especially single women, are far more in jeopardy of finding themselves in poverty as they age already. The future may find that the number of older women in poverty grows to new records. For women, especially single women, the onus will be on them to find ways to create their own financial security.

Men, far more than women, are known for not asking directions. A UK insurance company found that three-quarters of women will ask directions while less than 40 percent of men will do so. With that advantage in mind, women should be asking for directions for more than an unfamiliar journey. Women, especially, but of course men too, should be asking a financial advisor what kind of steps they should take to secure their financial future. Those that are married should be looking for help on maximizing their Social Security benefits because while the benefits may be shrinking they do still exist.

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