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How Women Can Maximize Their Social Security Benefits in Retirement

How Women Can Maximize Their Social Security Benefits in Retirement

June 07, 2021

Women face unique financial challenges when it comes to their retirement plans. They generally live longer and, unfortunately, many retire with lower assets. So how can women make their assets last?

For women are already retired, or nearing retirement, maximizing your Social Security strategy can help make your retirement successful.  Here are some little-known strategies women can use to maximize their Social Security benefits in retirement. 

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Choose to Have Withholding Tax Taken Out

Not everyone knows that Social Security is taxed. Unfortunately, we see that many women are left out of the discussions about money. Financial planning was mostly the domain of husbands and male advisors. Women often don’t have any idea that there’s a tax consequence on their benefits, or that they can voluntarily have withholding tax taken out to go toward their tax liability. Society has shifted, and the best way to take charge of your financial future is to educate yourself.

Here's the truth. The income thresholds for Social Security are very low and you will likely have to pay some taxes on your benefits. A qualified financial professional can help mitigate these taxes with strategic withdrawals of your non-Social Security retirement income.

One thing to be aware of: if you become widowed, your tax bracket can increase substantially. For many of our clients, its shocking! A widow’s tax rate may go up significantly in the year after her husband dies because she will now be filing taxes as an individual instead of filing jointly. 

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Collect Spousal Benefits or Social Security Survivors Benefits

Collecting spousal benefits, based upon your spouse’s work record, is another way to beef up your Social Security benefits. At-home moms often think they won’t get a Social Security benefit, but the Spousal Benefit was designed specifically for at-home moms and homemakers. While it's true that Social Security requires that you work for 10 years, the requirement for Social Security is not 10 consecutive years — it’s whatever your earnings are over your lifetime. 

You qualify for Spousal Benefits in one of two ways: You either lack sufficient work history to claim Social Security benefits on your own, or your Spousal Benefit would be larger than the benefit you are entitled to. To claim benefits using either method, you must either be at least 62 years of age or have a qualifying child under your care. You may be eligible for a Spousal Benefit even if you’re divorced! (Provided that the marriage lasted at least 10 years and the ex-spouse applying for spousal benefits never remarried.)

Maximizing your spousal Social Security benefits is all about timing, and the timing is determined by your circumstances as a couple. A comprehensive financial plan can help you make the most out of your retirement savings.

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Social Security Survivors Benefits

If you’re widowed and your deceased spouse’s benefit was higher than your retirement benefit, you are generally able to claim the higher of the two.  A widow is eligible for between 71 percent (at age 60) and 100 percent (at full retirement age) of what the spouse was getting before they died. 

Don't make the mistake of thinking you can start taking Social Security widow’s benefits as soon as you have become widowed! It's a rude awakening for some of our clients who are widowsMost don’t realize that they have to wait until they’re 60 to get their benefits. The gap between when they become widowed and when they can receive benefits could take years. 

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You Can Use a Do-Over

A common mistake that we see clients make is claiming too early. When they claim at 62, they think they will get automatically-adjusted increased Social Security payments when they reach full retirement age. It's a mistake to think that your benefits will increase. Once you claim Social Security, your benefits will not change. As soon as you claim at 62, you have locked in your permanent reductions.   

If you realize within 12 months of starting your benefits that you took them too early, you can undo your claim.You will have to pay back the funds you received over that time, but this means you can undo your early filing, and qualify for your eligible increases up to age 70. 

It's time for women to take back their retirement. At WMA, we do more than just advise, we act as your partner. We are dedicated to helping women take responsibility for their overall wealth. Our practice specializes in retirement planning and we are passionate about helping our clients achieve their ideal future.  Give us a call at 248-648-8598 or click this link to schedule a 15-minute Q&A about your specific situation.

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Forbes, March 2021


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