Why women may be better off retiring later than men

Social Security income increases both for men and women the later in life they retire, but this is especially true for women.

Social Security is something that many Americans - more than 35 percent, in fact - expect to turn to as a source of income once they retire. The beauty of the program lies in the fact that if you retire later, your monthly stipend will be greater than if you retire earlier in life.

Based on a newly released study, women would be particularly well-advised to retire later, as the benefits tend to be more significant than men who delay when they exit the workforce for good.

According to research conducted by the Center for Retirement Research at Boston College, both men and women tend to see an increase in their monthly Social Security income by retiring several years after the traditional age, which is usually the mid-60s. This isn't much of a surprise, but what proved noteworthy was the degree to which women stood to benefit by postponing retirement longer than men. For instance, when women work one extra year, their monthly benefits rise 8.6 percent, when combining the actuarial adjustment with the additional earnings that are common due to tenure. This compared to the approximately 7.5 percent increase when men stayed in the workforce one year more.

Worthwhile for women to work after 70
Women stand to earn a fairly substantial increase in Social Security payment by remaining in the workforce into their 70s. The study found that their benefits increase by a combined 88 percent, versus 82 percent among septuagenarian men.

What's the reason for the disparity? According to the study's authors, it's mainly because women are more likely than men to take time off at some point during the course of their careers, whether it be short-term - such as maternity leave, as an example - or long-term. In other words, women are replacing zero-earning years where they weren't in the full-time workforce.


Half of women worry maternity leave will adversely affect their retirement prospects. Half of women worry maternity leave will adversely affect their retirement prospects.

This latest finding comes in the wake of a poll done earlier this year, detailing how many women worry that taking extended leaves of absence will impact their ability to pay for retirement. Approximately 50 percent of women nationwide have gone on leave for personal purposes, the LIMRA Secure Retirement Institute reported. Of these, half believe it may work against them, compromising their capability of paying for their post-career years. At 35 percent, family is the most reason why women go on leave from their employment posts.

Retirement plan decision-makers frequently women
As a financial advisor, you should pay special attention to your female clients, as they're often the ones who make the decisions regarding retirement and wealth planning. Nearly 70 percent of retirement plans are governed primarily by women, meaning they're the chief decision-maker, according to data maintained by the Insured Retirement Institute.

Financing retirement is an intensely personal subject matter that requires number crunching. Please be sure to reference your clients to some of GFD's online retirement resources, including our financial calculator. Economic circumstances can change at any given moment and in different stages of life, so you and your client should be sure to consult it often.

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