Colgan: Social Security Reform Critical for Women

NCPA'S Colgan Available to Discuss Women's Unique Stake in Reform

DALLAS (April 30, 2002) -- Critics of reforming Social Security have begun charging that investment-based reform of Social Security will shortchange women. Yet according to Celeste Colgan, senior fellow with the National Center for Policy Analysis (NCPA) and director of its Women in the Economy project, "women have the most to gain from reform and the most to lose from doing nothing."

"Social Security is stuck in times past and needs reform," said Colgan. "Because women are working more years and paying more in Social Security taxes, they need to be assured that their taxes provide retirement security."

According to the NCPA, however, the way Social Security is currently structured shortchanges working women.

  • A woman with intermittent work experience is most likely only to be able to claim spousal benefits on her husband's contributions. She gets no benefit for all the taxes she pays in on her own earnings.
  • For those women who do receive benefits on their own earnings, compared to the taxes paid the additional benefits are slim. For example, for 25-year-olds with a high school education, the wife's decision to work full-time will increase the couple's taxes by 74 percent, but will increase their benefits by only 17 percent. Among those with a college education, a full-time working wife will increase the couple's taxes by 88 percent, but increase their benefits by only 24 percent.
  • Like life insurance and many private sector pensions Social Security provides benefits to surviving spouses with children under age-16. But unlike private sector programs, Social Security survivor benefits are reduced if the widow decides to enter the labor market -- $1 in benefits for every $2 of earnings above $11,280. This amounts to a 50 percent tax.

According to Colgan, the answer to these problems is broad reform that includes a system of personal retirement accounts with earnings sharing. "Under this system all deposits would continue to accumulate interest earnings whether or not both married partners are employed," said Colgan. "When they are realized, the benefits would be divided equally between husband and wife the same way as property is divided in community property states."