18 KIPLINGER’S PERSONAL FINANCE^ 09/2017Social Security benefits can help
cover basic expenses, but you may want
to hold off claiming benefits until age
70 to maximize your monthly payments.
If you make the most of Social Security,
a pension and other assets, “that’s the
trifecta,” says Cortazzo.Advice for couples. If you’re married,
make sure you’re the beneficiary of
your husband’s retirement accounts.
If he has a traditional pension, you’re
entitled by law to a survivor benefit,
which reduces the benefit your hus-
band receives during his lifetime. Cou-
ples are sometimes tempted to take
the higher amount even if it ends with
the husband’s death. But unless you’re
counting on dying before your husband,
it rarely makes sense to give up your
right to income for life.
Couples can sometimes increase
their overall income by choosing to
take the higher, single-life benefit and
buying life insurance to protect the
surviving spouse. Check the numbers
carefully to make sure this option
makes sense.
You can maximize your Social
Security survivor benefit if your hus-
band waits until age 70 to file for benefits and qualifies
for delayed-retirement credits and a higher payout. But be
careful, lest you have the same experience as Judy Rubin,
a partner with Plaza Advisory Group, in St. Louis. When
Rubin’s husband turned 70 and applied for benefits, “Social
Security encouraged him to take a lump sum and forfeit
the larger monthly payment,” says Rubin. “I’m 10 years
younger than he is, and the lower payment would have
meant a lower survivor benefit for me.”
Once you’re making the most of your retirement income,
be careful not to give it away—to pay for your grandchil-
dren’s college or some other worthy cause—at least until
you know you’re on firm financial ground. “The first year
and a half is the craziest,” says Rubin.
I’ll let you know how my own retirement unfolds. ■LISE METZGERJANET BODNAR Money Smart WomenRetiring? Max Out Your Income
L
ike everyone on the verge of retire-
ment, I have one major concern:
income. As a woman on the verge
of retirement, I have another major
concern: longevity. It’s possible that I’ll
live into my mid eighties or even lon-
ger—my mother passed away at 90. So
how should I, and other women, plan on
financing 20 to 30 years of retirement?
First off, add up how much you need
to cover your expenses. “When I ask
clients this question, they just laugh,”
says Dawn Doebler, cofounder of Her
Wealth, an initiative of Bridgewater
Wealth & Financial Management in
Bethesda, Md. “It’s shocking how many
people don’t know how much they’re
spending.” Yet that’s crucial informa-
tion because your top priority is to
ensure a steady stream of income
that covers your basic living costs.
Women who are covered by an
employer pension have a big advantage.
Not only can you count on a regular
payout, but chances are you’ll also get
more than if you were to take a lump
sum and use it to buy an annuity from
an insurance company. That’s because
pension plans use gender-neutral
calculations, which work in favor of
women, says Mark Cortazzo, senior partner at Macro
Consulting Group, in Parsippany, N.J. “Women would likely
have to pay more than men to generate the same income
with an annuity because they live longer,” says Cortazzo.
Say a 65-year-old man wanted to buy an annuity that
paid $50,000 a year for life. One major insurer would charge
a single premium of about $781,000 for such a policy. But it
would cost a 65-year-old woman about $822,000—or roughly
$40,000 more—to get the same $50,000 each year.
What if you have a choice between taking a pension or
investing a lump sum? Investing the lump sum could make
sense in certain circumstances—say, you don’t expect to
outlive your husband, you have income from other sources,
or you want to leave a legacy. But you’re taking a big risk if
you’re depending on your investments to cover your basic
expenses, especially if the stock market tanks. And you
may already have to manage money in an IRA or a 401(k).A quirk in employer
pension formulas
gives women
a big advantage.
JANET BODNAR IS EDITOR OF KIPLINGER’S PERSONAL FINANCE MAGAZINE.AHEAD