When it comes to achieving a more worry free retirement, knowing how and when to advocate for your best interests is an important skill to develop. Your voice is a crucial tool to learn to maximize your resources, especially when it comes to ensuring you receive the right Social Security benefits.
I’ve met numerous women who didn’t know how to advocate for themselves when setting up Social Security payments. Whether you’re single, married, or divorced, it’s crucial to think ahead—before it’s too late.
Can you remember a time when you wish you had spoken up for yourself, but didn’t? It could be as simple as your best friend choosing Chile’s for your girl’s night out, while you were having a serious craving for Cracker Barrel. Or perhaps you always agree to babysit your grandchildren on the weekends, even though you feel too exhausted.
It’s important to remember that there’s nothing wrong with thinking about your needs. In fact, we should all do it more often. Our happiness and well-being are dependent on being able to voice our various needs and ensure they are met. And when it comes to Social Security benefits, neglecting to put your needs first could result in losing hundreds of thousands of dollars.
The ABCs of Social Security Benefits
First things first: When do you start collecting Social Security?
Have you ever heard the term “full retirement age?” It’s the age you can start receiving 100% of your Social Security benefits. Your full retirement age depends on the year you were born, and it’s 66 if you were born between 1943 and 1954.
You may start collecting Social Security benefits a little earlier! But if you do, you’ll receive less money every month.
The good news? The longer you wait to collect, the more you’ll receive every month. If your full retirement age is 66 but you don’t receive Social Security benefits until age 70, you’ll get 132% of your monthly payments. This could be the difference between $2,000 and $2,640 every month. Pretty exciting, isn’t it?
So, those are the basics. But if you’ve ever been married (and especially if you’ve been widowed), things become more complex.
We want to help women avoid common Social Security mistakes. These are mistakes anyone could make if they don’t talk with a professional who truly specializes in Social Security maximization.
Mistake #1: Not Tailoring Social Security to Your Marriage
Are you married? Then you might think collecting Social Security benefits is simple enough. You start collecting when it makes sense for you, and your husband does the same. Everybody wins, right?
Not quite. If you’re married, you should approach Social Security as a couple. Otherwise, you risk losing out on a lot of money, especially if your husband dies before you do. Take Jane, for example.
Jane was married to Tom, and he was the primary breadwinner. His Social Security checks were set to be twice the amount of Jane’s.
They did their best to plan ahead with the limited knowledge they had. Tom had some heart issues, and men in his family had died due to heart failure. On the other hand, Jane’s parents had been healthy and lived well into their 90s.
With this information, they decided that Tom would start collecting Social Security early, at age 62. If he had waited until age 66, he’d have collected $2,000 each month. And if he had held out until age 70, he’d have received $2,640. But because he started at age 62, he only collected $1,500 monthly. He didn’t expect to live long, though, and they wanted to have the money while they could enjoy it together.
Tom died when he was 72. Jane gets to keep only one Social Security check so she elects to keep Tom’s since that was the higher benefit.
But she and Tom didn’t think about what would be best for her after he died. Now Jane is collecting $1,650 each month. But she could have been receiving $2,640 if they had known it was more prudent for Tom to wait until age 70.
Jane is struggling both emotionally and financially without Tom. No woman should experience a financial loss when she’s already dealing with the heartbreaking loss of her spouse.
Mistake #2: Not Doing Your Research About Survivorship Benefits
After a husband passes away, most widows want to know that they are going to be financially secure. That’s why it’s a good idea to talk with a professional about what happens to you financially after the death of your spouse, way before it happens..
I met a woman named Cindy who had been married to the love of her life. He received $2,800 in Social Security every month, but he died not long after the payments started coming in. Cindy was 66 years old when he passed away.
Cindy thought about collecting her own Social Security checks at age 66, but she was smart enough to know she wanted to have the largest benefit possible. She waited until age 70 so her monthly payments would be higher. She lived on a tight budget for four years so that she would earn more money in the long run.
Cindy didn’t realize she could have been collecting 100% of her late husband’s benefits after he passed away, because she had already reached full retirement age. She still could have switched to her own higher benefit at age 70, but she wouldn’t have had to cut corners while she waited.
She could have collected $2,800 each month for four years—which means Cindy lost out on $134,400.
Mistake #3: Not Knowing What You’re Entitled to as a Divorcee
When you get divorced, you have to deal with money a lot. That doesn’t stop should you get remarried… or even when your ex passes away. Did you know that many women qualify to receive survivorship benefits when their ex-husbands die?
Sally and Peter were married for over 20 years before they got divorced. Sally fell in love with an amazing man and got remarried at age 60. When she was 65, she found out that Peter had passed away.
Sally started collecting $2,500 in her own Social Security at age 66. But here’s what she didn’t know: Because she waited to remarry until after she turned 60, she had been eligible to collect 100% of Peter’s survivorship benefit when she turned 66.
If Sally had realized this earlier, she probably would have strategized differently. She could have collected $2,000 every month as a survivorship benefit, and waited to collect her own Social Security until age 70. Sally’s benefit of $2,500 per month (at age 66) would have grown to $3,300 by the time she turned 70.
Between the loss of the survivor benefit and taking her Social Security at age 66, Sally missed out on $96,000 ($2,000 times 48 months) in survivorship benefits and $3,300 (instead of $2,500 per month) once she turned 70.
Take Control of Your Social Security Benefits
Do you think Jane, Cindy, and Sally were foolish to make these mistakes? Think again! They were intelligent women; however, Social Security claiming is confusing, which more often than not leads to significant loss of opportunities. Because they didn’t know how to look after their own financial needs, they became more financially vulnerable. And they deserved all the money they left on the table.
If you want to take ownership of your finances, get in touch. We’d love to learn about your situation and talk about Social Security benefits.
