Watch out, moms: The motherhood penalty can extend into retirement.
Mothers with one child receive 16 percent less in Social Security benefits at age 62 than non-mothers do, according to a new paper from the Center for Retirement Research at Boston College. Each additional child reduces benefits by 2 percent more.
In part, the gaps are because parents and non-parents are very different groups when it comes to work and retirement decisions, said co-author Matthew Rutledge, a research economist at the center. Moms have lower lifetime earnings, too, from unpaid time out of the workforce to care for children, and that motherhood penalty on pay. (All else equal, the center found that mothers with one child have lifetime earnings 28 percent less, with 3 percent additional drop for each additional child.)
Being aware of that potential Social Security gap could help moms mitigate it.
Try to keep a hand in the workforce — even on a part-time or consulting basis — during periods when you leave a job to raise a child, said certified financial planner Nora Yousif, vice president at RBC Wealth Management in South Easton, Massachusetts. Your Social Security benefit at full retirement age is based on your highest 35 years of earnings, and it's better to have a low-income year than a zero-income year in that calculation.