NCPA - National Center for Policy Analysis


October 7, 2008

Social Security exists -- or should exist -- to serve people, and lately, it's been doing only a so-so job.  Major reforms are required to modernize Social Security, such as better poverty reduction and less discouragement of work.  More importantly, a fairer treatment of the family, says the Peter G. Peterson Foundation. 

Consider the following examples of the unfair treatment of families:

  • A single head of household paying taxes and supporting children often receives thousands of dollars less in lifetime benefits than spouses who do not work, do not raise children and do not pay any taxes.
  • A husband and wife who each earn $40,000 will receive tens of thousands of dollars fewer in lifetime benefits than a husband who earns $80,000 and a wife who earns nothing.
  • A divorced spouse with nine years and 11 months of marriage gets nothing out of spousal and survivor benefits, while a divorced spouse with 10 years and one month of marriage gets expected benefits worth hundreds of thousands of dollars.
  • Widows who dare to remarry can lose tens of thousands of dollars of benefits by remarrying someone who earns less than their late spouse did.
  • Individuals (mainly men) can generate tens of thousands of dollars of benefits by having children later in life -- benefits not available to most people who raise children.

Most of these problems derive from a stereotypical view of the family that was never accurate and is increasingly out of date.  The courts would declare this design discriminatory if private plans tried to adopt it, says the Foundation.

Modernizing Social Security requires addressing this basic issue of fairness and efficiency.  Otherwise, Social Security will remain a failed system no matter what its level of solvency, concludes the Foundation.

Source: Gene Steuerle, "Modernizing Social Security," Peter G. Peterson Foundation, September 22, 2008.


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