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The "Mom Gap" Can Lower Your Social Security Benefit

Losing even a few years of earnings - along with lower wages as compared to men - can make a significant difference in a woman's Social Security benefits.

By Marcia Mantell, RMA

A woman in her late 60s, already collecting Social Security, asked, “When should we have learned about Social Security?” She didn’t mean like a course in school, but as working adults. As a current Social Security recipient, she was stuck with the benefit she had learned about just a few years before retirement. She wondered if the best time to learn about how much you’ll get from Social Security should have happened closer to age 50 instead of 60-something.

My response: age 22.

Two Unpleasant Encounters with Social Security

In most cases, we find out about Social Security at two distinct points in our careers. The first encounter is in our first “real job,” where we are quickly introduced to FICA tax. Also known as payroll taxes, 7.45% of your paycheck gets docked for “FICA”—6.2% goes to Social Security, 1.45% to Medicare. Here you’ve just landed your first job, thinking you’re getting paid pretty well. 

But you quickly find out the difference in “gross pay” and “take-home” pay. FICA is viewed as a bad thing.

Marcia Mantell, RMA®, is the founder and president of Mantell Retirement Consulting, Inc., a retirement business development, marketing & communications, and education company supporting the financial services industry, advisors, and their clients. She is author of “What’s the Deal with Retirement Planning for Women,” “What’s the Deal with Social Security for Women,” and blogs at

Marcia Mantell

The second encounter is toward the end of our careers. At that point, we’re getting really serious about a retirement date. You know you’re entitled to Social Security so you find your current estimated monthly benefits. And, you are quite dismayed by the amount of your projected benefits. You’ve been paying in for a long time and thought you’d get a lot more out. Another disappointment.

Social Security and Younger Workers

We are missing a golden opportunity to understand our golden years from that first job at age 22, give or take a few years. Instead of showing new workers only the tax side of their paychecks, they need to also understand the benefit side.

Lots of young people know that 7.45% of their paycheck is snatched away. Few, if any, understand why. Even fewer know that their future benefit is calculated on how much they earn over their career. Each person needs to work at least 10 years to qualify for their own benefits. And, their benefit amount relies on their highest 35 years of real wages.

There is no way for any young worker to connect these dots. It’s overwhelming enough to just get into the swing of working and building a career. Finding out at the point of retirement that you should have worked a few more years or found a way to earn a higher income is not helpful. It’s way too late.

Building your Family Influences Future Social Security Benefits

Learning about Social Security at 22 is particularly important for women. Why? Because many eventually become mothers. And once children are in the family mix, women’s careers so often take winding detours. Some moms decide to stay home to care for their babies and never return to the workforce. Some step off the career path for several years, then return where they left off or to start an entirely new job that is less demanding and comes with less pay. Still others will return to their existing jobs after a short leave and decide to juggle family and career for decades.

The path each mom takes will have a significant impact on her retirement benefit. And, the reality comes as a surprise at retirement. If she had known how her “mom path” would influence her retirement financial picture, might she have considered or chosen different options?

Moms who are Dependent Spouses

Since 1990, about 27% of moms stay home for some or most of their earnings years. They are doing the heavy lifting of raising the children and running the home. That job comes with a $0 salary.

It’s always fascinating to see the annual report that estimates the real salary of an at-home mom: This year, the estimate from was just over $178,000. An at-home mom’s value can indeed be quantified, based on the various jobs she holds. From Social Security’s view, however, her earnings record stands at $0 for each year she stays home.

Dependent moms will be entitled to collect their own benefit at retirement: 50% of her spouse’s Primary Insurance Amount, or PIA (the calculated value at his Full Retirement Age, or FRA). So, if a long-time-full-time-at-home mom has not earned 40 credits to qualify on her own for Social Security retirement benefits, or who has a small benefit from the years she worked before the kids, she’ll get her maximum benefit at her FRA: half of his.

If his PIA is $2,300, she will receive a separate check of $1,150 if she claims at her Full Retirement Age. And, if she has her own benefit of say, $800, but is eligible for $1,200 as a spousal benefit, she’ll get an extra $400 “top-up” added to her own benefit. Sometimes this is a delightful surprise for an at-home mom to learn about; sometimes, it’s disappointing.

Moms Independently Eligible for Social Security Benefits

About half of moms return right away to work after having babies. Many continue to work full-time; others have the opportunity to work part-time. At retirement, if they have accumulated 35 years of earnings, and their benefit is higher than 50% of their spouse’s PIA, they are independently eligible for benefits and will receive their own larger benefit based solely on their work history.

But there’s a catch: it’s the wage-gap.

In careers where a mom has earned at least the taxable wage base (in other words, is a high earner) she and her male peers will receive the same calculated benefit. For example, a high-earning mom will be eligible for a primary insurance amount of about $3,250 per month. Same result for a male counterpart who also earned at least the taxable wage base.

However, if she is paid less for the same job, her benefit will be lower. And, the differences can be stark. Instead of earning the taxable wage base each year, what happens when women are paid less for the same work?

· White women earn on average 82% of white male’s wages. This translates to some $300 less per month in benefit payments, and a 30-year retirement shortfall of over $110,000.

· Black and Hispanic women fare much worse. On average, women of color earn only 65 cents to a white male’s income. That translates to a $600 per month smaller benefit, and over $215,000 in lifetime retirement benefits.

· Asian women, interestingly, earn nearly the same, on average, as their white male peers: 94% of average income. Even a small differential causes a shortfall, but this time, it’s $100 per month less, or $37,000 over a 30-year retirement.

How many moms who have juggled a career while raising a family and running a household will be enthusiastic about these shortfalls in retirement income? Because these moms are “independently eligible,” their best and highest Social Security benefit depends on their ability to generate substantial wages. They will not also get a spousal benefit (50% of his).

Popcorn-Career-Moms and the Impact on their Social Security

One other category of moms needs to understand how Social Security works from early in their careers. These are moms who move in and out of the workforce over a 40-year employment period. Approximately 29% of moms take this path. I call these moms “popcorn-career-moms,” meaning they pop in and out of jobs at various times in order to meet the ever-changing demands of their family. While critical to handle the needs of the family without burning out, these moms are unknowingly reducing their future Social Security income.

Sure, some moms are fortunate enough to have lots of financial resources available to them. But many more will eventually find that their Social Security payment is providing 50% to 90% of their household’s income in retirement. To say that Social Security will be a most critical underpinning of a mom’s retirement is an understatement.

There are many paths a popcorn-career-mom may take. Let’s look at two scenarios that illustrate the implications to their retirement income foundation:

Pops out of her career for children, returns to full-time work
In one situation, a mom pops out of her career for 10 years when her children are young. When she returns to full-time work, assume her new starting salary is 20% higher than when she left the workforce 10 years ago. She gets a 3% annual raise going forward. Because she has nine years of zeros in her work record, her PIA is 20% less than if she hadn’t stopped working.

Pops out of her career several times
On a different path, this mom pops out of her career when her children are born. After five years, she returns to full-time work for eight years, earning the taxable wage base. Then, she pops out again when her children are teens for another seven years. She finds a new position, part-time, at 50% of the taxable wage base and works for two more years. Then, her parents need assistance, and she permanently comes out of the workforce. All in, she’s worked 17 years with wages and has 18 years at home. The implication to her Social Security benefits is that she can expect 26% less in monthly income.

Significant Consequences to Social Security Benefits 

Moms face significant demands on their time, and often, that means prioritizing family over earnings. Any time a mom pops off her career path, the implications to her future Social Security benefit are significant. It’s common for moms to get a 20% to 25% cut in benefits by moving in and out of the workforce.

One of the great surprises with Social Security benefit calculations is that moms (and sometimes dads, if they are the parent staying home) take such a pay cut without even knowing it. Until retirement, that is.

One strategy to address the situation is to replace as many zeroes as possible. In some cases, it’s possible to go back to work. Moms can replace the early- and mid-career zeroes with real earnings. Their highest 35 years of earnings do not have to happen in consecutive years.

This is not to say that moms shouldn’t stay at home with their children. Rather, if all younger workers knew they need at least 35 years of earnings to get their best benefit from Social Security, they could make more financially informed and joint decisions with their spouses, and they wouldn’t be so surprised at their Social Security benefit at retirement.

So, when should we all learn about the income side of FICA? I stand by age 22.

Action plan

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About the author

Marcia Mantell, RMA®, is the founder and president of Mantell Retirement Consulting, Inc., a retirement business development, marketing & communications, and education company supporting the financial services industry, advisors, and their clients. She is author of “What’s the Deal with Retirement Planning for Women?” and the newly published “What’s the Deal with Social Security for Women?” and blogs at