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Are Advisers Sexist About Social Security?

It’s no secret that women live longer than men. But a new study by the Wharton School’s Pension Research Council suggests that some professional financial advisers neglect to take that fact into account when they tell clients how to time their Social Security benefits. The mistake could cost women who outlive their husbands — and who might benefit from a significant monthly check into their 80s or 90s.

Slightly more than half of women 65 and older rely on Social Security for three-quarters of their income, according to the Employee Benefits Research Institute. Choosing when to start taking benefits — a decision that can be affected by factors like health, savings and other sources of income — is complex even for pros. While seniors can start receiving checks as early as age 62, doing so means they’ll get less each month than they would if they waited until the maximum age of 70 to start taking distributions. Spouses that don’t work — usually women, in the baby boomer generation currently reaching retirement age — also receive benefits based on their partners’ earnings.

But women’s longevity is not being taken into account in the calculus, the study found. “At age 62, there’s a lot you can do,” says co-author Andrew Biggs, a former Social Security Administration official. “You may have a big 401(k), you can go still go back to work. At 72, there are a lot fewer options.”

The study, which posed questions about a number of specific scenarios to a group of about 400 professional financial advisers, suggests that many are tailoring their advice to the needs of the husband without thinking as carefully about the impact on the wife.

For instance, presented with a 62-year-old man in average health who wants to retire right away but has, together with his wife, saved $800,000, only one in five advisers suggested he put off taking Social Security as long as possible. The recommendations were made despite the fact that with such a large nest egg, the couple appeared to face little immediate need for cash and the decision would significantly crimp the woman’s survivor benefit should she become a widow.

The National Association of Personal Financial Advisors and the Financial Planning Association, two trade groups for advisers, didn’t immediately respond to calls seeking input about the study.

Of course, while most financial advisers are men, the study doesn’t prove that these conclusions were driven purely by chauvinism. A more charitable explanation might be that the advisers perceived the chief breadwinner in each scenario as their client. Another, says Biggs, is that the educational materials provided by the government, while recently improved, haven’t historically done a good enough job of emphasizing the issue.

Correction: An earlier version of this post misidentified the center that published the study. It is Wharton School’s Pension Research Council.


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    • With all due respect to advisors, a woman, even if she has never worked a day for pay in her life, has an obligation to learn about financial matters and to advocate for file and suspend or other strategies if she thinks they are good for the couple as a unit based on her own analysis of her long time financial position. If she has no money under her own control and has not worked for pay, her views may not get or (perhaps) may not be entitled to much consideration, but she can still do a lot with household management to plan for the future.

    • Bill–thanks for the comment. I respect your opinion. Hey…it’s OK to have different opinions. That’s the purpose of this space! :-)

    • @Roger, you have good logic and correct math as far as I can tell. But, your statement that it takes years to make changes to SS (implying you can count on certain rules staying intact long enough to replan if necessary), is what I’ll challenge. In our current political environment which is the most divided I’ve seen in my 59 years of actually paying attention, I don’t think your statement is as rock solid as it once was. Since everything is a “crisis” (heck I didn’t even know health care was a crisis until the current president said so), clearly SS is in crisis mode. And the payroll “tax holiday” of the past two years has weakened it even further. Add to that the HUGE deficit we run up each year, something will give somewhere. Remember when we pay our SS taxes, it becomes the property of the govt, but with a “promise” of annuity payments for life. But, promises made by our govt can and have been broken and SS is no different. They have the gold, so they make the rules.

      My point is, SS is in crisis so at any time the rules can change on a dime. This throws a wrenh into SS planning for everyone. Using up your own personal wealth while waiting for an increasing SS annuity, is playing a fools game. Wait at your own peril. Something is better than nothing. Heck in California they are trying to alter retirement benefits for those currently in retirement! If the California govt can do it (even if they couldn’t) the federal govt certainly can. They are running the show and they make the rules we must follow. They can change the “file and suspend” in a heartbeat and they can even make it retroactive. Clearly my view is to file and begin collecting as early as possible at age 62. Something is better than nothing.

    • To: of course Not necessarily an “ism”, but it is probably a gender issue. Money IS NOT “gender neutral”!

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  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.