Social Security for the Newly Single Woman

March 08, 2023

A change in your situation can mean lots of changing financial details, too. Here’s how to make those as painless as possible.

Whether you’ve lost a loved one or you’re extracting yourself from a relationship that didn’t work out, a change in marital status can feel like a change in everything. This is especially true in the world of finance, where marital status affects how you pay taxes, how you save for retirement, and how you collect benefits once you’ve retired. Newly divorced and widowed women can feel these changes even more than men. In part, that’s because of society – women are likely to earn less due to the glass ceiling and the (valued but unsalaried) role of the “housewife and mother.” But women also plan retirement differently because of a biological reason: Men in the United States have an average life expectancy of around 76 years, while women on average live to around 81. That extra five years can alter the way a retirement strategy unfolds … but it can also mean bigger changes when a long-time husband is no longer there.

Wise Women Wait

It usually pays to wait before claiming retirement benefits, regardless of your marital status. Women have more to gain by waiting because, as the more long-lived sex, they can look forward to a longer retirement. The key factor here is what’s called “full retirement age.” For those born after 1960, full retirement age happens at 67. For those born earlier, full retirement age is gradually reduced, month by month, until it reaches age 66 for those born before 1954.

You can claim benefits for yourself from age 62 onward, as long as you’ve worked and paid taxes into the system for 10 years. But if you retire at 62 when your full retirement age is 67, your benefits will be reduced by 30%. Every year you wait, that percentage gets bumped down by around 8% per year (or 2/3 of 1% per month) in what’s called a “delayed retirement credit,” until you’d be getting the full retirement benefit from Social Security at 67.

(Note that if you do go for the extra bump from delaying your retirement, you should still sign up for just Medicare at age 65 or risk costs going up. But that’s a different conversation!)

Waiting beyond your full retirement age can make your monthly payout even bigger, since delayed retirement credits will stack up by around 0.7% per month. In other words, if your full retirement age is 67 but you start receiving retirement benefits at age 70, you’ve delayed for 36 months, so you'll get 124% of your usual monthly benefit. The delayed credit stops increasing once you’ve reached 70.

The Zero Effect

Here’s another reason why waiting can help: The Social Security Administration calculates monthly benefits by examining a beneficiary’s 35 highest-paid years. For someone who spent years as an at-home wife and mother, many years might show zero income. Even one year of part-time earnings can take one zero out of that equation and have a marked effect on those SSA calculations.

If you’re a wife with no work record (or so little it’s barely worth counting) you’re likely to be eligible for between one-third and one-half of your spouse’s Social Security benefit.

Social Security and Former Spouses

Married women (and men) can claim a “spousal benefit” from Social Security as soon as a retired spouse starts collecting benefits. At full retirement age, the lower earner can collect 50% of the higher earner’s benefit.

But spousal benefits don’t disappear after a divorce.

Divorced spouses can still collect on their ex’s benefits, as long as the two of you were married for 10 years or more and both of you are over 62. It doesn’t matter if your ex has started collecting Social Security or not. If you have more than one former spouse, you can collect spousal benefits based on the highest earner’s benefits. This doesn’t reduce the amount your ex receives, either, when and if he decides to collect benefits himself, and it doesn’t affect any benefits due a new wife if he remarries.

In fact, there’s no reason your ex would even know you’re claiming spousal benefits – they’re not reported to him. And if that ex dies, as long as you’ve been collecting those spousal benefits, you’ll also be entitled to the higher “survivor’s rate” granted widows and widowers from then on.

Widows and Waiting

The survivor’s rate depends on when a widow starts taking retirement benefits. You have the option to start at age 60 (and only get 71% of the amount of your late spouse’s full benefits), or to wait until full retirement age and collect an amount equal to 100% of what your late spouse would have received. If you’re taking care of your late spouse’s children, that full retirement age might be lowered for you, and if you’re disabled, the starting age can be as low as 50.

If you were living with your spouse when he passed away (or she – same-sex couples are included in all of these regulations), you’re also entitled to a $255 lump sum death payment.

The decision whether or not to wait to collect benefits can be slightly more complicated for widows who have their own Social Security retirement benefits coming based on their own earnings.

If you earned less than a departed spouse, it might make sense to start claiming your own benefits at age 62 and then claim survivor’s benefits at full retirement age. However, if your own benefit at age 70 would be larger than the survivor’s benefit at full retirement age, it might make better sense to take the survivor’s benefit at 60 or 62 and put off claiming your own benefits, letting them build up month by month until you turn 70.

As always, when faced with complex decisions, it’s a good idea to weigh the alternatives carefully. Consulting with a financial advisor can help simplify a complicated situation. Feel free to reach out whenever you feel a little clarity might help.

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