The fact that benefits are based on pre-retirement income is one reason why some retirees’ Social Security checks can cover their expenses but not others.
The greater your earnings, the greater your Social Security contributions, and the greater your benefit. Even though two retirees may have worked the same number of hours and years, their Social Security payments may be vastly different.
Social Security For Women Vs. For Men
This explains why the average Social Security check for women is significantly smaller than for men.
As of May 2022, men received an average of $1,848 per month, according to USA Today. In comparison, the average monthly check for women was $1,494, a difference of approximately $354 per month, or $4,248 per year. Consider the following if you want to know how much that difference will add up to over the course of a retirement:
The average man will receive approximately $85,000 more in Social Security benefits than the average woman over the course of a 20-year retirement. Over thirty years, the difference exceeds $127,000.
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Gender Pay Gap
You don’t need a degree in economics to understand why: This is because, throughout the decades, women have consistently earned less than men, and the pay gap still exists.
Women earned 82 cents for every dollar earned by men in 2022, according to the Society for Human Resource Management, which cited Payscale’s 2022 State of the Gender Pay Gap Report.
Additionally, women are much more likely than men to leave the workforce to care for their children. As a result, women earn significantly less money than men over the course of their professional careers.
This has a significant effect on their Social Security retirement benefits, which are based on their highest-earning 35 years. When an individual is out of the workforce for an extended period of time, the zero-income years are factored into the benefit calculation, resulting in even smaller checks.
Nonetheless, there have been some encouraging developments. As the gender pay gap has shrunk over the past few decades. In May 2000, women received less than 77% of the average man’s Social Security check. In May of 2022, the disparity was closer to 81%.
How Women Could Increase Payment?
The best strategy for women (and others) in the workforce who want to increase their Social Security benefits in retirement is to increase their income.
Consider requesting a raise, obtaining licenses and certifications that can lead to a higher salary, or switching to a higher-paying position. If you are unable to work outside the home due to caregiving obligations, look for remote or side jobs that can generate income.
Keep in mind that if you obtain a side gig that generates 1099 income rather than W-2 income, you will be responsible for contributing to Social Security through estimated tax payments or on your tax returns.
It is also essential to earn a living for at least 35 years, even if some of those years are spent in part-time or supplemental employment. If you can earn a high income for more than 35 years, the higher-earning years will replace any lower-earning years that came before.
Delaying your application for Social Security benefits is another way to increase your monthly payment. Although you can apply for Social Security as early as age 62, waiting a few years will result in a larger monthly payment.
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