Women Strengthen Social Security

While making their own retirement more secure, women in the labor force also fund the program

by: Carole Fleck | from: AARP Bulletin | November 1, 2011

More women are in the labor force than ever before — nearly 60 percent were working in 2010, up from 43 percent in 1970 — and paying into Social Security. Their contributions not only boost their own retirement security, but also strengthen the system in a way that wasn't foreseen by its founders back in 1935.

Social Security would have amassed substantially less in revenue, but spent about the same in benefits, if today's mothers stayed home and collected benefits on their husbands' earnings, as women did in the 1940s and 1950s, says Casey Mulligan, an economics professor at the University of Chicago.

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But as women's careers and earnings have taken off, their contributions have swelled Social Security's coffers. "Men and women are living longer, and women's contributions to the system have paid for that," Mulligan says. "When Social Security was founded, people weren't expected to be retired for a third of their lives."

Cynthia Hess, of the Washington-based Institute for Women's Policy Research, says benefits are especially important to women because they tend to outlive men and are less likely to have other retirement income.

According to the Social Security Administration, women 65 and older receive an average $12,155 a year in benefits, while men get an average $15,620. In 2009, the checks kept close to 9 million women 65 and older out of poverty.

"A lot of people talk about 401(k)s as an alternative to Social Security," says Nancy Altman, cochair of the Strengthen Social Security Campaign. "What they miss is that Social Security is insurance and 401(k)s are savings. You can outlive your savings."

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