When many women retire they usually find that their Social Security benefits are much lower than they thought – especially if they are divorced, single, or a widow.
This article will explain why.
First here is how Social Security benefits are calculated.
- The Social Security Administration will look at the best 35 years of your earnings (adjusted for inflation and counting them as months) in which you were a contributor to Social Security to get a grand total.
- If you worked more than 35 years the grand total of your best 35 years’ earnings will be divided by the best months in those 35 years (ignoring months when you did not earn much or anything at all because you were unemployed or a homemaker). This will result in what is called the Average Indexed Monthly Earnings.
- If you worked exactly 35 years then the grand total (again adjusted for inflation) will be all the months in those 35 years.
- If you worked less than 35 years then the grand total will still be divided by the number of months in those 35 years but each month that you did not contributed will be added as a ZERO which will drastically bring down your Average Indexed Monthly Earnings. THIS IS THE CASE FOR MOST WOMEN who have not worked in the workforce for many years. If you worked, for example, only 50% of the time (17 years) then your Average Indexed Monthly Earnings will be 50% less than it could have been.
- And if you NEVER contributed to Social Security because you never worked outside the home, then your Social Security benefit is ZERO.
This Average Indexed Monthly Earnings number is then multiplied by a percentage number which based on your retirement age to determine how much money you will receive every month.
Work more – get more
The more years you worked (only the months up to 35 years) and the more you earned each month then the more you will get as a Social Security Monthly benefit. The rich get more – the poor get less.
However, if you spent many years working in the home and not contributing to Social Security or had many low-paying jobs, then your Social Monthly benefit will be much less.
As a result
Working in the home is penalized
in calculating your benefits.
And because women on average make less than men, the Social Security benefits are much lower than what men get once again.
The final calculation is complicated so check out this document Social Security explained or use this Social Security calculator.
What is your situation?*
Single and not yet retired
You are not eligible for any Social Security benefit.
Married and not yet retired
The only Social Security benefit coming to your household will be that of your husband.
Widow and not yet retired
You can get 50% of whatever was your husband’s Social Security benefit.
Divorced and not yet retired
You will not be entitled to any Social Security benefit from the government or anything from your ex-husband’s Social Security – even if he has passed away.
Single and retired
You get only your own Social Security benefit as calculated above.
Married and retired
You get your own Social Security benefits and your husband gets his as calculated above.
Widow and retired
You can get your own Social Security benefits OR 50% your husband’s as calculated above at your option. Most women take the larger amount.
Divorced and retired
If you are divorced you are not eligible for any portion of your husbands Social Security payments. You can only receive your own benefits after you reach your retirement age as calculated above.
Remember in ALL cases the amount of your Social Security benefit will be lower than your husbands unless your earnings were more.
So what can you do?
Start a retirement business to supplement your income.
* I am only talking about normal Social Security benefits and nor other benefits like being disabled.
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