Social Security & Women

January 7, 2008 by wendy.

Do you feel that Social Security will only contribute a small fraction of your retirement income? Don’t discount the effect that Social Security can have on your retirement! According to a report titled “ Women and Retirement Security”, prepared by the National Economic Council Interagency Working Group on Social Security, social security payments are critical for women in retirement. Major reasons given are:

1) Women Have Lower Income in Retirement than Men — And Thus Higher Poverty Rates. The poverty rate of elderly women was 13.1 percent, compared to 7.0 percent among men. Among unmarried elderly women, the poverty rate was significantly higher — about 19 percent.
2) Social Security Constitutes a Large Percentage of Women’s Income. Elderly unmarried women — including widows — get 51 percent of their total income from Social Security. For 25 percent of unmarried women, Social Security is their only source of income, compared to 9 percent of married couples and 20 percent of unmarried men. Without Social Security benefits, the elderly poverty rate among women would have been 52.2 percent and among widows would have been 60.6 percent.
3) Women Face Greater Economic Challenges in Retirement. First, women tend to live longer: a woman who is 65 years old today can expect to live to 85, while a 65 year old man can expect to live to 81. Second, women have lower lifetime earnings than men do. Hence, women have smaller savings than do men. And third, women reach retirement with smaller pensions and other assets than men do.

Social Security rules can be a bit confusing. Basically, if you are divorced after at least 10 years of marriage to the same person, you can collect retirement benefits on your former spouses’ social security schedule. You need to be at least 62 and your former spouse must be eligible for social security or is currently receiving benefits. Depending on the age that you begin collecting benefits, you may be entitled to receive the greater of an amount approximately 50% of your former spouse’s benefits, or b) your benefits based on your own earnings. The exception to this rule is if you remarry. If however, your second marriage was to end later whether by divorce, death etc., and you were previously receiving a spousal benefit, you would again be eligible to receive that benefit.

What does this mean to you when divorcing?
1. You must be married to the same spouse for a total of ten years. You can be married, divorced, and eventually remarried, as long as the total time is to same spouse is ten years.
2. In some cases, if you have a shorter marriage, you may want to delay a divorce until after you have been married for a total of ten years.
3. Be aware that a re-marriage (to a different spouse) will cancel your social security spousal benefit from the husband from which you are receiving benefits. Because of this rule, many older couples do not remarry, but choose to co-habitate.
4. Although you may be tempted to have a burning ceremony after your divorce, be sure to save copies of your marriage certificates, divorce decrees, and other relevant paperwork. This way, if necessary, you can prove your marriage and divorce in the future without the hassle of obtaining copies from a governmental entity.
5. Social Security benefits count as income when calculating child support.

Social Security will continue to be important for women in the future. As the labor force participation rates of women continue to rise, women in the future will reach retirement with much more substantial earnings histories than in the past. Therefore, the percentage of women receiving benefits based solely on their own earnings history is expected to rise from 37 percent today to 60 percent in 2060. Being aware of your earnings, your spouses’ or your ex-spouses earnings record at the Social Security Administration will ensure that when you are ready to retire, you will know what your will be receiving and can plan accordingly.

The Social Security Administration is a great resource for questions related to divorce and social security benefits. You can reach them on-line at www.ssa.gov or by calling them at 1-800-772-1213.

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