The Biggest Social Security Claiming Mistakes Women Make

You can’t earn more than the [stipulated] earnings limit, or else your benefits get clawed back. If you claim at full retirement age and continue working, and that year’s wages become one of the highest 35 years of earnings [upon which SS benefits are always calculated], it could bump up your benefit a bit. But it would kick out something else [a different year’s earnings].

What happens if you hit age 70 — the age at which you can receive your highest benefit — and continue to work but don’t claim Social Security until a few, or more, years later?

When you start to claim, you don’t get “back pay” from age 70. So if you’re still working, it’s a big financial mistake not to claim from 70 because if you don’t, you’re leaving all that money on the table. Once you’re beyond full retirement age [in this scenario], Social Security will pay you six months back pay to get you started, at your request. But that’s all the back pay that you’ll receive. 

What are homemakers’ typical misconceptions about Social Security?

The big mistake is made by women who have had what I call “popcorn careers.” They pop in and out of a career over 40 years and think they don’t qualify for Social Security because they didn’t have 10 consecutive years of earnings. Maybe they started to work in their early 20s, had kids, didn’t work [outside the home], but then went back into [the labor force] part time. The requirement for Social Security is not 10 consecutive years — it’s whatever your earnings are over your lifetime. 

How about homemakers who didn’t work outside the home? Do they quality for a Social Security spousal benefit?

At-home moms think they won’t get a Social Security benefit. They assume that because they didn’t work [in the labor force], why would they get Social Security? But they’re entitled to half their husband’s benefits. The spousal benefit was designed specifically for at-home moms and homemakers. It [now] applies to same-sex couples, too. Gender is out of Social Security now — you’re [just] either legally married or not.

Suppose a couple with a homemaker wife who’s younger than full retirement age decides to retire. What’s the Social Security impact on them?

Her spousal reduction factor — I call it the penalty — is higher than that of the spouse who was the worker. Both spouses get penalized for claiming early, but the reduction for the younger one, who hasn’t reached FRA, is more aggressive. So there are two different reduction factors. Women have no idea about that, and the woman’s is worse.

Do a widow’s benefits start as soon as her husband dies?

Often women who are between 52 and 60, whose kids are grown and gone, that become widowed think that’s [the case]. They don’t realize they have to wait till they’re 60 to get their benefits. For some, that’s an impossible situation because they didn’t plan early enough for the possibility that their husband might die [before they do] and that they’d be left with no income. The mistake is thinking they can start taking Social Security widow’s benefits as soon as they become widowed. But the gap might be six months — or six years. 

What’s another rude awakening for widows?

They don’t know that one of their Social Security checks is going away — immediately. The mistake is thinking that both checks will continue even though the husband has died. So they haven’t planned for a reduction in household income. The woman’s benefits can be cut between one-third and one-half depending on the career she had. 

That’s a real shocker!

Sometimes women call their bank and say, “There’s been a mistake.” But the bank doesn’t necessarily know that the husband has died. Widows don’t need to be fighting about this two or three weeks after their husband’s death! 

What’s an eye-opener for many women who are divorced and remarried?

This is a big one: Divorced women — who were previously married 10 consecutive years or longer and meet all the other Social Security rules for a divorced person — who remarry want to be in the driver’s seat. They say, “My first husband made lots of money; my current husband doesn’t. So I want to choose my first husband’s Social Security.”

Can they do that?

No, no, no!  You can’t choose between your ex and your current spouse until they’re both dead and you’re the remaining spouse of the three. At that point, Social Security looks at all the benefits: yours, if you have your own; your first husband’s; and your [second] husband’s.

Which would the woman receive?

You get the benefits that are highest, but you don’t get to add your own. It’s so disappointing for these women when the light bulb goes on and they realize: “Gosh, I don’t get mine and his!”

Do widows with government pensions receive a survivor benefit on their husband’s Social Security?

No. They get one [or the other] — it’s the higher one. But [clearly] their household income drops. Government Pension Offset [GPO] is the unsavory little component of the Social Security laws that affects widows quite a lot. 

Please elaborate.

When you’ve been receiving a public pension — say, you’re a teacher — and your husband dies, you don’t get much of a survivor benefit. In fact, it may even be zero, depending on how big your pension is. The offset calculation on large pensions really impacts the survivor benefit. 

Please talk about the Windfall Elimination Provision of the Social Security laws. That’s usually another big surprise when it kicks in.

If you have a hybrid career, where you work [or worked] partly for the government — which doesn’t withhold Social Security taxes — and partly in corporate America, which does, your Social Security benefit pays second to the pension — and those benefits will be reduced.

What’s an example?

Let’s say a woman has been getting a $3,000-a-month pension and her husband has been receiving $1,800 in Social Security. When the husband dies, that $1,800 check stops — literally overnight. How do you make up for that? Lots of widows can’t.