Retirement Realities Drive Social Security Decisions for Women

Lower account balances, longer life expectancy and not working with an adviser can wreak havoc on a woman’s Social Security benefit. 

Eighty-two percent of retired women currently collecting Social Security benefits took them early, locking in a lifetime of lower payments, according to a Nationwide Retirement Institute survey. 

Another drag on women’s finances in retirement could be the effect of not working with an adviser. Fewer than one in five (just 17%) of the women surveyed say they received advice on Social Security from an adviser. However, nine in 10 women (87%) who work with an adviser say their Social Security payment was as expected or more than expected.

“One of the key takeaways of our survey is that women need to get professional advice earlier, to ensure they have a plan in place before a life event renders them unprepared and forces them to take it early,” says Kevin McGarry, director of the Nationwide Retirement Institute.

It’s not that women don’t want the advice. In fact, more than three in five women (63%) admit that if their financial adviser could not show them how to maximize their benefit, they would switch to an adviser who could.

Of the nearly 300 women currently collecting Social Security, only five maximized their monthly check by waiting to claim at age 70, Nationwide found. However, waiting as long as possible to claim Social Security means a bigger check, a boon for retirees in meeting retirement goals, especially since claiming strategies have recently changed, eliminating a popular but under-utilized tactic. 

NEXT: Why don’t more women delay claiming Social Security?

Waiting until age 70 to claim can mean a benefit up to 76% larger than the monthly payout if claiming began at age 62, according to Shawn Britt, director of advanced consulting at Nationwide. Unfortunately, fewer than 2% of women wait. In general, Britt says, “Women have to be prepared to live longer and often have to do so with less savings. This makes maximizing Social Security benefits extremely important.”

The survey asked women to look back on the claiming decision they had made. Nearly a quarter (24%) of women who filed early (between 64 and 66) said they would change their decision and file later.

Many who claimed early felt they had been forced to take their benefits in the face of expensive, unexpected retirement realities. The ones who were satisfied with their filing decision say an unforeseen life event (46%), unexpected health problems (19%) or job loss (11%) compelled them to take it early.

Because of a strapped budget, more than a third of women (38%) say they can’t do the things they want in retirement. Health care expenses are another challenge, and one in four (25%) cite health care costs as cutting into the retirement they desired.

Almost one in four (24%) overestimate their Social Security benefit. Women who have yet to collect Social Security on average expect $1,457 in monthly benefits. Women nearing retirement also expect their benefit to pay 53% of their expenses in retirement.

But the reality is that even women retirees who were able to wait to collect at full retirement age report an average monthly payment of $1,376, while those who started taking Social Security early report receiving just $980. Citing the budget act that altered Social Security rules, Britt says future retirees will likely end up receiving even less than expected.

“Even though filing decisions based on income need, health and longevity are inherently personal, many women decide to claim Social Security when their husband does,” Britt says. Whether single, married, widowed or divorced, there are a variety of smart filing strategies open to women, he points out, but too few are seeking professional advice to take advantage of them.

 More information for advisers on Nationwide’s Social Security tools are on its website