There is nothing remotely chic or glamorous about being poor and elderly. Yet women are far more likely than men to find themselves in that exact situation. Women make less and live longer, so smaller resources have to stretch to cover longer years. In many cases, if they'd clued in sooner, many women could have improved their long range financial security. Getting a few basic facts under your belt can put you in charge of your destiny. That's a good thing, because nobody else may be looking out for you. I bet that you are already so overextended that thinking about yourself, and something so remote as your own retirement, may not even figure on your to-do list. Well, give me five minutes and your future will instantly be brighter.
First, check your earnings statement. The first thing to do is make sure that the Social Security Administration (SSA) has an accurate record of your annual income for every year that you've worked. It's easy to get online - just go here and follow the instructions. You will also see estimates of how much you are eligible to receive in retirement, disability or survivor benefits, and how much you've paid into the system in taxes. If you've spent more years out of the workforce than in (raising a family, maybe?) don't despair yet - but still, take a look at your record at least once a year.
Second, get a handle on the spousal benefit. What you get in retirement benefits may not be limited to your own work history. From the program's origins in the 1930's, lawmakers included a way for the stay at home spouse to avoid destitution even if s/he had not been employed. If you've been married for at least 10 years, you can claim up to half of your spouse's benefit, if it's more than the benefit based on your work history alone. Obviously, if you're married, encourage your spouse to keep track of his or her annual statements, too. You'll find more on the spousal benefit on the website.
Third, understand the impact of "normal retirement age". WHEN you want to start receiving your benefits makes a difference. If you were born after 1960, and you wait until age 67 to file for benefits, you will get a larger monthly amount than if you file at age 62. On the same theory, if you push off receiving benefits until you are 70, you can get an amount significantly higher than what you would have gotten at age 67. Under current regulations, let's say your full benefit at age 67 is $1000 per month. If you think you may die sooner rather than later, you may want to claim your benefits at a younger age, say 62. You can do that, but your monthly benefit is reduced to $750. On the other hand, you may be blessed with long life genes, and you may have savings, or a pension, to make ends meet for awhile between the end of work and the beginning of social security benefits. In that case, you may opt to wait until well after your normal retirement age, and not get your benefits until you are 70, at which point you'll receive $1320 per month. Deciding when to get your benefits is a big step. It deserves lots of thought, perhaps involving a financial expert in the decision.
Wasn't that easy? Social Security is the most efficient government program, costing pennies to administer, keeping millions out of poverty, and not contributing to the debt, because it is funded out of designated payroll taxes. You hear so much doom and gloom about it - but if nothing at all is changed, benefits will still be paid for decades to come, at about 75% - 80% of current levels. Knowing where you stand while there is still time to do something about it will make you confident. And that's sexy!
'Til next time,
Your (Wo)Man in Washington
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