The Biggest Retirement Challenges for Women

Women live longer, but have less money than men to fund their retirement years.

Elderly woman looks sad

Older workers may become an increasing drag on some businesses, as their salaries and insurance rates tend to be higher.

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Failing to maximize Social Security. Women generally receive a higher proportion of their retirement income from Social Security than men. In 2010, 16 percent of women age 65 and older depended solely on Social Security for their retirement income, compared to 12 percent of men. And Social Security is the only source of income for about 21 percent of all widowed women.

It's especially important for women to maximize the amount they get from Social Security. "Taking Social Security benefits early results in a permanent reduction in the amount of the monthly retirement benefit," says LaTina Burse Greene, the assistant deputy commissioner for retirement and disability policy at the Social Security Administration. "Conversely, taking benefits later can result in a permanent increase in the amount of the monthly benefit." For example, a woman eligible for $1,000 per month at age 66 would receive only $750 per month if she signs up at age 62. However, if she delays claiming Social Security until age 70, her monthly payments will grow to $1,320 each month for the rest of her life.

[See What Older Workers Don't Know About Social Security.]

Married women should additionally coordinate claiming with their spouses to increase spousal and survivor's payments. At the end of 2010, 12.9 million female Social Security beneficiaries age 62 or older (54 percent) received at least part of their benefit as wives or widows of entitled workers. "Optimal Social Security decisions, especially for married women with low balances, can create more retirement-income wealth than the woman has accumulated in her 401(k)," says O'Donnell. "For many, we believe the best use of retirement accounts is as a bridge to fund retirement in the early years, allowing the deferral of Social Security benefits for as long as possible."