Women are uncertain about Social Security. Here’s how to help them take control

Worrying about how to fund retirement and uncertainty about Social Security isn’t a novel concept. But the level of angst differs by gender. Currently, one in four women (23%) feel they’re “on the wrong track” for retirement, compared to just 15% of men, according to a National Retirement Institute (NRI) survey. And 41% of women hold a negative or neutral outlook on their retirement planning versus just 29% of men. What’s more, women are more pessimistic than men when it comes to Social Security, according to the Social Security Administration (SSA). The downside of this negativity? It could result in your female clients having unrealistically negative expectations of Social Security, which could cause undue worry and hasty decisions regarding their retirement savings. 

This is your opportunity to reduce the skepticism that women have about Social Security and inject a large dose of positivity about their ability to attain their retirement goals with proper planning. 

One way to ease their anxiety is by spelling out the facts about benefits, claiming strategies, and the long-term solvency of the Social Security Trust Fund and its ability to pay benefits into the future. Another way you can empower and build a stronger connection with women clients is by sharing a more optimistic, upbeat message as to the key role that Social Security plays in achieving a secure retirement.

Toward that end, you can add value by taking an empathetic view of women’s concerns as you work to help close the retirement confidence gender gap and set up your female clients for success. Sharing insights that can help alleviate women’s financial fears and offering solutions to their retirement savings challenges is a potent one-two punch to cement long-term advisory relationships with women clients and grow assets under management, building lasting relationships.

There are both economic and behavioral reasons why women have more negative views about their finances and Social Security than men. Women, due to their longer life expectancy, greater likelihood of pausing their careers to care for family members, and lower pay compared to men, have more economic vulnerability. In fact, women’s Social Security benefits are 19% lower than their male counterparts due to these factors, according to the SSA.

Compared to men, women also tend to be less informed and less knowledgeable about Social Security, particularly regarding how benefits are calculated, according to the SSA. In fact, six of 10 (62%) women do not know or are unsure what their benefit amount will be, a 2021 Nationwide Retirement Institute (NRI) survey found. In contrast, just 38% of men were unsure of what benefit amount they would receive. Women are also more likely to worry about the Social Security program’s financing issues and solvency, according to the SSA.

Adding to women’s economic vulnerability is greater earnings risk compared to men. Typically, women experience more career interruptions or turn down promotions for more demanding jobs with higher pay due to family caregiving. Often, women pause their careers as they head into their prime earning years. In fact, women’s pay relative to men’s drops most sharply around the ages of 35 to 44, according to the Pew Research Center.

Play the role of coach. Lean in and stress to women that overcoming any retirement obstacles and becoming financially independent is possible with the right financial plan and the proper state of mind. Ask what worries are on her mind to personalize the discussion, addressing her concerns head on. Once you know what’s causing women’s pessimism surrounding Social Security, you can help alleviate those worries by debunking any myths about the retirement benefit that women may have. 

Make sure they’re comfortable with the basics of Social Security, including if they qualify, and the impact of timing. Show them how to access their own Social Security Statement online to see what benefit they’re currently on track to receive when they retire. And if their projected benefit amount puts them on the path to a secure retirement, reinforce the upbeat message that they are on track. If there’s a shortfall, stress that tweaks can be made to their plan to shore up their retirement income stream.

The more specific you are the better. You can discuss how monthly benefits are calculated and when to start taking them; what the different and smartest claiming options are for women based on life expectancy; and tactical steps to evaluate and coordinate spousal and survivor benefits.

It’s also vital that you emphasize the importance of coordinating claiming strategies between spouses by considering the longevity and monthly Social Security benefits for each spouse. When you're working with married couples, it's important to match the larger benefit to the longer life expectancy because you want the larger benefit to be the one that lasts the longest.

Similarly, you can run various claiming strategies for your divorced and widowed women clients. The same holds true for your single, never-married women clients who rely on their own Social Security benefit.

Debunking misconceptions about Social Security and how benefits will be impacted once the Trust Fund reserves are fully spent is also critical. Explain why Social Security is not going away. Make clear that payments are not going to stop. Discuss how money will continue to flow into and out of the Social Security system thanks to payroll deductions of Americans that are still working. If no changes are made, the Social Security reserve fund is estimated to be depleted by 2033, but Social Security will still be able to pay about 80% of the currently promised benefits. A reduction, but not to zero! Your message: Social Security will still pay you a benefit.

No doubt, when it comes to adding value, financial professionals who work to alleviate women’s concerns about Social Security will help them earn women’s business and their trust. Any steps financial professionals can take to inject more optimism into women’s financial thinking will go a long way toward helping to cement a long-term client connection.