As Social Security celebrates its 85th year, we explore four significant ways it can fail women and how to enhance your benefits.
This year marked not just your birthday but also the 85th anniversary of Social Security and the 100th anniversary of women's suffrage. While the latter likely received some attention, it too was overshadowed by the pandemic. These milestones deserve recognition for their profound impact on our society.
One remarkable aspect of Social Security is its ability to bring people together across political divides. According to a recent survey, 96% of people, regardless of party affiliation, regard it as one of the most crucial government programs.
However, many of us lack a clear understanding of its workings, which leads to missed financial opportunities.
“Social Security serves as a vital safety net, yet many divorced women are unaware they can claim half of their ex-husband’s benefits if their marriage lasted at least ten years. Some believe it replaces their entire paycheck, when it's meant to prevent poverty,” notes a retirement expert.
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Even without a grand celebration, it's crucial to grasp Social Security's intricacies to ensure you and your family maximize benefits. Four financial disparities impact women: the wage gap, the mom gap, the widow gap, and the care gap. Here’s a closer look at each.
The Wage Gap
This persistent issue affects women throughout their careers and directly impacts Social Security benefits. Currently, women earn 82 cents for every dollar a man makes. This disparity results in lower contributions to Social Security, leading to reduced retirement funds.
READ: Three Questions About Social Security You Should Ask
The Mom Gap
This gap occurs when women leave the workforce to raise children. If affordable daycare isn't available, continuing to work becomes challenging. During those years away, women miss out on salary increases and promotions, leading to lower Social Security benefits later. Even a 5-year absence can cost up to 10% of potential benefits.
The Widow Gap
Surviving spouses can claim full benefits based on their deceased partner's earnings. However, if that partner claimed benefits early, it could significantly reduce the widow's income. Many men claim their benefits before reaching full retirement age, locking in lower amounts for their spouses.
READ: Consider These Factors Before Filing for Social Security Early
The Care Gap
This is similar to the mom gap, but it occurs when women leave work to care for aging parents. Often, this happens when women are at their peak earning years. Missing these vital years can hinder Social Security benefits significantly.
How Can We Address These Gaps?
When Social Security was established in 1935, married women were prohibited from working in many states. Though we've made progress, the calculations for benefits remain unchanged. Your benefit is determined by your highest 35 years of earnings, whether from your own work or your spouse’s.
To close these gaps, there are three steps to take. First, familiarize yourself with how Social Security benefits are calculated. The key takeaway is to wait as long as possible to claim benefits, ideally until age 70, which maximizes your monthly payouts.
If you choose to stay at home to raise children, understand that it will have financial implications later. If you can, continue working during caregiving years to earn Social Security credits, even if it means managing expenses for care.
Lastly, advocate for equal pay and better childcare options. Write to your representatives and support organizations pushing for change. The wage gap and lack of quality elder care are issues that need addressing.
Stay informed about your financial status. To celebrate Social Security's 85th anniversary, visit the Social Security Administration website to set up your account and review your earnings statement. If you're married, encourage your spouse to do the same so you both understand your future benefits.
While parties are fun, achieving financial independence is far more rewarding.
