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Mothers Receive 16% Less In Social Security Benefits

Look out moms, motherhood’s tolls can push through to retirement.

Boston College’s Center for Retirement Research revealed in a new paper that mothers with one child receive on average 16% less Social Security benefit at age 62 than non-mothers. Keep note; every additional child reduces benefits by 2 percent or more.

These gaps are slightly due to parents and non-parents being opposite groups when it comes to working and retirement options, says co-author Mathew Rutledge, a research economist from the center. Mothers typically have a lower lifetime earnings sum due to unpaid time out of the workforce to nurture their children, and that comes at a financial penalty. Keeping everything else the same, the center discovered moms with one kid have a lifetime earnings sum that’s 28% less, with 3 percent less for each additional kid.


 Learning about the possible Social Security gap might allow mothers to close it, even if only slightly.
Make an effort to continually be in the workforce, even if that means only part-time or as a consult, when you need to raise a child, explains financial planner Nora Yousif, vice president of RBC Wealth Management in South Easton, Massachusetts. Your Social Security benefit at full retirement age (FRA) is determined by your highest 35 years of earnings, and naturally, it’s better to have a low-income year instead of a no income year in that formula.
“The most important thing is to make sure they are employed, and it’s not an under-the-table job,” Yousif notes.
Another option is retiring later or “phasing into retirement” to compensate for an absent or low-income years adds financial planner Victoria Fillet, a co-founder of Blueprint Financial Planning in Hoboken, New Jersey.
A 2016 article from the center revealed that 46% of woman, who work until 62 years of age rather than 62, replaced a no income year in the Social Security benefit calculation. Every dollar you earn in late-career earnings could raise your benefit at full retirement age by 15 to 90 cents, the center determined.
However, working for longer is a tough method to rely on, added Rutledge. Health complications or an event that requires you to provide care for a loved one could make you clock out earlier than expected, and elderly workers could be discriminated.
“There is some evidence that women are more likely to face discrimination than men,” Rutledge discloses.
You can read the full article here to learn more.