By Cyril Tuohy
Women who don’t work with a financial advisor are nearly three times as likely to say their Social Security payment was less than expected, according to a survey commissioned by the Nationwide Financial Retirement Institute.
The survey found that 37 percent of women working with an advisor said they received good advice regarding Social Security, compared with only 13 percent of women who said they received good advice when not working with an advisor.
“Women who work with an advisor are more likely to receive good advice on optimizing Social Security,” said Shawn Britt, director of advanced consulting for Nationwide.
Knowing when to draw on Social Security is a delicate balancing act and depends on benefits coming to the spouse.
“If you have the ability to sacrifice a little for a few years, it is worth it,” Britt said in a news release. “Maximizing benefits will result in less chance of outliving other income sources and reduce the chance of not being able to maintain your lifestyle.”
With tens of millions of baby boomers retiring, advisors are spending more time digging into the details of their clients' Social Security benefits. As a rule, the longer beneficiaries wait to take Social Security benefits the better, because the delayed payments will be larger.
The findings of Nationwide's survey, conducted online within the United States by Harris Poll between Feb. 27 and March 4, were based on responses from a representative sample of 471 U.S. women aged 50 or older who said they are either retired or plan to retire in the next 10 years.
The survey found that more than four in five women elected to take Social Security early — only 15 percent waited until their full retirement age, and just 3 percent filed for their benefits late. Beneficiaries are eligible to draw on Social Security payments beginning at age 65.
Britt said that some women elect to take Social Security benefits early in the mistaken belief that they will receive more money in the long run, while others elect to take the monthly payments out of necessity or economic hardship.
Good advisors will brief their clients on the different options for taking Social Security. Married women, for example, can have their husbands “file and suspend,” which allows a wife to collect spousal benefits but delays the husband’s withdrawals until 70.
“That way, if he dies, she ends up with a much higher payment as a widow,” Britt said.
Women who took their benefit early reported an average monthly payment of $1,025, while those who waited for full retirement age received an average of $1,270 every month, an increase of 23 percent.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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