It’s no secret that women live longer than men. But a new study by the Wharton School’s Pension Research Council suggests that some professional financial advisers neglect to take that fact into account when they tell clients how to time their Social Security benefits. The mistake could cost women who outlive their husbands—and who might benefit from a significant monthly check into their 80s or 90s.
Planning for your estate while planning for longevity can mean some specific choices and compromises. This fact of life is never truer for married couples, especially when one spouse outlives the other. In this context, Social Security is little understood and the consequences can be disastrous.
The title of a recent article in MarketWatch says it all – “Widows getting cheated out of Social Security.”
The longevity calculus is oftentimes missing as it concerns women who rely on Social Security. Especially amongst earlier generations, wives may be more reliant upon their spouse’s Social Security and, therefore, on their spouse’s work history. This is almost a given if the wife was a homemaker.
If the married couple begins taking Social Security early, then it may adversely affect the spouse who did not work outside the home (or worked for a short duration, usually at reduced compensation), but who will survive longer. Even aside from Social Security, this disparity between the sexes is not something that should escape a prudent financial planner’s attention. Unfortunately, this is an easy fact to forget.
In addition to the MarketWatch article, a recent Forbes article titled “Sudden Loss: Financial Advice For Widows” provides some practical pointers to widows and those who advise them.
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Reference:
MarketWatch (August 24, 2012) “Widows getting cheated out of Social Security”
Forbes (August 28, 2012) “Sudden Loss: Financial Advice For Widows”