Women and Social Security: What You Should Know

Source: AARP.org | September 21, 2004

For millions of older women, Social Security is the mainstay of retirement income. In fact, over half of Social Security beneficiaries are women and for one in four, it is the only source of income in their retirement. Without Social Security, the poverty rate for women would be significantly higher, increasing from about 12.4% to over 50%.

Currently, there are proposals to change Social Security including "privatizing," or diverting some money from Social Security into "carve-out" accounts. Some assert that women would be better off in a system like this.

However, despite rising earnings and an increased participation in the labor force, women remain concentrated in low-paying occupations. In 2002, working women had a median weekly wage of $531 compared to $685 for full-time working men.

Carve-outs would take money out of Social Security and leave less money to pay promised benefits. This could result in benefit cuts and increased taxes. It could also mean borrowing huge sums of money above and beyond what would be necessary to restore Social Security's financial health.

AARP advocates that any changes to Social Security should build and strengthen the system, not erode its essential protections. AARP believes that carve-outs would weaken Social Security and replace part of its guaranteed benefits with individual risk.

The Social Security Administration, by law, cannot take gender into consideration when calculating benefits, so women and men with identical work histories receive the same benefits. However, women typically live longer than men and receive benefits for a longer period of time.

Social Security is guaranteed for life. As a result, beneficiaries need not fear that they will outlive their benefits. Nor do they have to worry about market fluctuations influencing their Social Security.

Even with no changes to the current system, it's estimated Social Security will still be available to pay 73% of benefits after 2041. This is because taxes paid by current workers will continue to flow into the system and can be used to pay benefits.

The challenge is to ensure that Social Security continues to provide future generations with these guaranteed benefits. AARP believes Social Security is not in crisis, but our leaders must start planning now to strengthen it.

Other Resources

• Social Security
• What Does "Privatization" of Social Security Mean
• Understanding Social Security