Nov

16

Pension Benefits for Women

Posted by maureen

November 16, 2007 |

Despite the fact that most women contribute to the family income and have either 401K programs, pensions and social security benefits or a combination of all three, they often leave the financial decisions to their spouse. Many times a spouse will take action on his pension and, although current law requires spousal permission before pensions can be taken, I suspect many women sign off without understanding her future possibilities. Women still outlive men on average so this is important for those later years. Know where you stand:

Company pensions – many older men will still retire with company pensions even though companies have switched to 401k programs. There was a transitional time when companies offered both, so many boomers retiring soon will probably have both. When an employee opts to take that company pension he is offered multiple choices; cash lump sum, maximum monthly benefit that ends on his death etc. That last one should concern the average woman because it means no pension benefit when he dies. Since it is likely you will outlive him can you survive without it?

Social Security benefit – we all know that we can get a part of his pension when he dies but did you know you can get his entire pension if you drop yours? (Assuming you have one) Not many people know that. In this case the best thing to do is to maximize the pension by either having him work or simply not take it, until he is 70 years old J This may not be something you choose to do or are able to do financially but its is great to know this ahead of time and make the best decision for you. There have been calculations done by researchers and reported at Forbes.com for lifetime maximum social security benefit based on when working husbands and wives retire. Surprisingly, the winner is ‘wife 62, man 70’. This assumes the average person life expectancy with the man earning more than his wife, so the wife outlives the husband and takes over his pension. Isn’t that interesting! If you don’t believe me hop over to Forbes here and read the entire article.

It behooves women to become educated on these issues. Many women have relied entirely on their husbands for their financial welfare. But times are changing and we need to arm ourselves with knowledge now, if we are to remain independent in our later years. Knowledge is power so know thy stuff!


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