The latest data from the Bureau of Labor Statistics (BLS) shows that the gender gap in pay still exists. Among full-time workers of both genders, women earn approximately 82 cents to every dollar that men earn. The gender pay gap propagates throughout many aspects of American life, including one important retirement aspect — Social Security benefits.
Social Security benefits are based on the highest-earning 35 years of a person's career, so gender pay inequity builds up over time to produce a significant difference in benefits. Add on the fact that more women than men take time off from careers to be caregivers for children or elderly relatives and the collective difference between men's and women's benefits are substantial.
Using 2013 data for reference, the average monthly Social Security payment to retired beneficiaries was $1,294. The average retired male worker's benefit was $1,451 compared to $1,134 for the average retired female worker. Given that approximately 36% of Social Security recipients over age 65 are dependent on their benefits for over 90% of their income, and that as of 2014, women outlive men on an average of 4.8 years, the gender gap poses a difficult challenge for retired women. Smaller benefits must last for a longer time.
The good news is that the gap, as it affects the Medicare population, is closing. Recent generations are working more, marrying less, and accommodating careers within marriage at a higher rate than previous generations. By 2030, the gender pay gap is projected to close completely with respect to median income (not necessarily the average) for retirees from ages 65-74 in 2030. The projected total for both men and women is $31,750 (measured in 2013 inflation-adjusted dollars).
However, the overall gap will still exist in 2030 as older retirees retain a difference of nearly $3,000 between the median income for men and women. For those approaching retirement in 2030, the gender gap will still persist, but to a lesser extent as measured by median salary (within a few hundred dollars).
This information is supplied by the Kaiser Family Foundation (KFF), who have provided an interactive graph that allows you to see the changes over time and sort by a number of variables, including race, marital status, and educational level. You can try it out for yourself on the KFF website.
At all ages, according to the KFF graph filtered for marital status, the median income for single and divorced recipients was less than for married or widowed recipients.
Married women may have one option that can blunt the gender gap effect. If their spouse earned significantly more than they did, it is possible for them to file for spousal benefits that are up to one-half of the benefits the spouse earned. Unfortunately, that strategy does not help single women, married women who earned somewhat less than their spouse, or family breadwinners.
Since the gender pay gap is not likely to be resolved soon, women approaching retirement age must be vigilant about maximizing their benefits and researching the filing strategy that works best for them. Filing early reduces your overall benefits, but by waiting to file until age 70, you can increase your benefits by up to 8% per year of delay.
It is also more important for women to not rely on Social Security and develop their own retirement plans to the extent possible. Every little bit helps to avoid being completely dependent on Social Security. Nobody — male or female — wants that dependence if he or she can avoid it.