NCPA - National Center for Policy Analysis

Women Are The Key in The Social Security Debate

March 7, 2002

Women are 60 percent of Social Security beneficiaries, and a quarter of single elderly females live solely on the monthly benefits. Last week's congressional hearings on Social Security reform revealed discordant views on privatization among women's groups and public-policy think tanks. While most agree that benefit calculations need to change to reflect the realities of modern female life, few agree on the way to reform Social Security.

The biggest concern of opponents to privatization is the loss of guaranteed benefits to low earners and people with longer life expectancies. The Independent Women's Forum, however, backs private fund management, as long as workers are able to opt out of personal accounts if they will fare better with the traditional benefit.

Proposals before Congress would allow workers to invest 2 or more percent of the 12.4 percent combined employer and worker Social Security payroll tax in stocks and bonds. In all the proposals, the government takes a cut of the earnings, which would essentially advance the retirement age by forcing employees to work longer for the same benefit.

Celeste Colgan, senior fellow at the National Center for Policy Analysis, said that as the population grows older, Social Security must move away from a defined benefit to individually owned accounts a woman can pass on to her children.

There is little motivation for younger women who aren't primary breadwinners to continue paying Social Security taxes that now only provide half of their husbands' benefit if he dies first, says Colgan.

Despite their conflict on personal retirement accounts, all women's groups agree that if adopted, the funds should be pooled to ensure a fair distribution among unequal-earning spouses. The NCPA endorses that approach, where a wife contributing $4,000 with a husband contributing $6,000, is entitled to $5,000 if the couple divorces.

Source: Kristen Gerencher, "Privatization's female component: women's groups divided at Social Security hearings,", March 6, 2002.


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