Your Money, Your Future
Your Money, Your Future

Moms get 16 percent less in Social Security benefits

Key Points
  • Mothers with one child have lifetime earnings that are 28 percent lower than non-mothers, according to a new paper from the Center for Retirement Research at Boston College.
  • That gap translates into Social Security benefits that are 16 percent lower for moms at age 62.
  • Moms can close some of the difference by eliminating "zero income" years in their work record.
Couple's guide to Social Security

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.

Mayte Torres | Getty Images

"The most important thing is to make sure they are employed and it's not an under-the-table job," Yousif said.

You might also look at retiring later or phasing into retirement to make up for any zero- or low-income years, said certified financial planner Victoria Fillet, a co-founder of Blueprint Financial Planning in Hoboken, New Jersey.

A 2016 paper from the center found that for 46 percent of women, working until age 63 instead of 62 replaced a zero-income year in the Social Security benefits calculation. Every dollar in late-career earnings could increase your benefit at full retirement age by 15 to 90 cents, they estimated.

But working longer is a tough strategy to bank on, said Rutledge. Health problems or a need to provide care for a loved one could force an earlier-than-anticipated exit, and older job seekers can face discrimination.

"There's some evidence that women are more subject to age discrimination than men," he said.

Scrutinizing available Social Security claiming strategies can also make a difference, Rutledge said. Claiming before your full retirement age permanently reduces benefits, while each year you delay after reaching your full retirement age until age 70 boosts your benefit by 8 percent.

If you're married, the paper found, "the motherhood penalty is almost negligible," with spouses having more opportunity to maximize their benefits.

"It's not so great to rely on spousal benefits," said Rutledge, pointing to rising rates of gray divorce.

But if you are divorced or widowed, you may be able to claim benefits based on that former spouse's record, said Yousif. Run those numbers to see which benefit is better.

New parents might also look at this news as a good nudge to reassess your retirement plan, Fillet said.

Social Security benefits account for at least half of income for 50 percent of married couples and 71 percent of unmarried individuals, according to government statistics. Beefing up your savings can help counterbalance the motherhood impact on that Social Security check.

"It's important to save as much as you possibly can," Fillet said. "There's absolutely no way to get around it."

More from Your Money, Your Future:

Pick the wrong Medicare drug plan and the cost will shock you
90% of workers could botch their benefits picks
Government report sounds alarm on retirement crisis