How to handle lower Social Security benefits for women

When a husband and wife come into my office and we review assets and income, very often I would find the husband’s Social Security to be $2,400 a month or more and his wife’s benefit at $1,000 or less. They might both have been employed outside the home. What is the reason for the difference, I wanted to know. The conclusion, paradoxically, was both shocking and understandable. There are solutions, however, for women and since a wife’s participation in household income also raises overall income for both, a solution for one is often a solution for both.

First, it should be noted we have paid more attention to Social Security in the past several years, one reason being the decline of defined benefit pension plans, another the fact that deferring receipt of Social Security benefits can substantially increase lifetime income for anyone who has participated in the job market. Defined benefit pensions can guarantee a stable monthly income to the recipient but they are fading. Social Security does essentially the same thing. The only other guaranteed monthly income of consequence at a specific rate would be an income annuity.

Since maximizing Social Security benefits has joined the ranks of other planning tools to add to retirement income, I began to investigate some years back the reason for differences between clients in Social Security income. Here is what I discovered.

You need to work enough years in the system. One of the least recognized facts about Social Security is that not working in the Social Security system for a given number of years can dramatically affect lifetime benefits. Social Security considers the worker’s highest 35 earning years. It adjusts for inflation, determines the average adjusted monthly earnings, and multiplies by a formula.

This helps to explain why women’s Social Security tends to be so much lower.

Suppose an employee has not worked 35 years in her or his lifetime before retirement? The years not worked in Social Security are counted as zeros. It does not take a mathematician to figure that working fewer than 35 years can seriously undermine benefit calculations. This is one way that women, especially older women, tend to have lower Social Security retirement benefits on their own work record.

It is more likely that a mother, rather than a father, will stay home to raise the children. Unless she also works a job from home and pays into Social Security, she is out of the Social Security system. Later, when it is necessary to remain at home to care for aging parents or inlaws, a wife or daughter is more likely to do so although husbands and sons might also curtail their work schedule because of caregiving. That means more years out of the system.

Taking a common example, if you graduated from college at age 22 and spent 10 years raising your family and then returned to work and retired at 62, you would have lost 5 years from the system not to mention retiring at a lower early retirement benefit. If you also graduated at age 22, not having worked prior and then spent 10 years raising your children while later spending from age 56 to 66 caring for aging parents without contributing as an employee into the Social Security system, you would have lost 11 years. Those years would be averaged into the total for 35 years as zero.

What can you do? You can go back to work later and start to make up those lost years from the system at least until you have 35 years in. More years help. Although lower income for Social Security purposes can reduce overall benefits on retirement, it does not affect it as much as no income would.

There is another way but it still can be less satisfying. A spouse (or former spouse if divorced and previously married to the other for 10 years or more) can request one-half of the other spouse’s benefit but adjusted for the age when her benefits began. If you start at 62 (assuming your spouse is full retirement age, basically 66), then you get less than if you start at a later age. If you fit any of these categories you should explore further.

You need to earn more. This is obvious.

Many Social Security resources are available on-line at www.socialsecurity.gov. Seek help where help is needed.

For more, listen to “50+ Planning Ahead” a weekly radio program on WCHE 1520 on Wednesdays from

4 to 4:30 p.m. with Janet Colliton, Colliton Elder Law Assocs., PC, and Phil McFadden of Home Instead Senior Care.

Janet Colliton is an elder law and estates attorney with offices at 790 East

Market St., Suite 250, West Chester, Pa. 19382, 610-436-6674, colliton@ collitonlaw.com. She is also, with Jeffrey Jones, CSA, co-founder of Life Transition Services, LLC, a service for families with long term care needs.