How to Improve Social Security for Women

Advocacy groups say it’s time to update rules that have become outmoded since being enacted in 1935.

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Changing Social Security rules could substantially ease poverty among older women, according to a new set of proposals. The ideas include reducing the loss of benefits for lower-income recipients when their spouse dies, giving benefit credits for caring for children, enhancing disability benefits, and extending benefits to same-sex couples and their children.

[See 10 Ways to Boost Your Social Security Checks.]

The recommended changes are contained in a white paper, "Breaking the Social Security Glass Ceiling," sponsored by the National Committee to Preserve Social Security & Medicare Foundation, the Institute for Women's Policy Research, and the National Organization for Women Foundation.

Women continue to earn nearly 20 percent less money than men, the paper says. In addition, many women stay at home for parts of their careers to raise families, further reducing their lifetime earnings. As a result, they have smaller nest eggs when they retire and also have earned permanently smaller Social Security checks as well. Retired women outlive men by an average of 2.5 years, it adds, and their financial disadvantage worsens in widowhood.

"In 2009, the average annual Social Security income of a retired man was $15,620, while the average yearly income of a retired woman was $12,155," the paper says. "In 2010, 46 percent of elderly unmarried women, and 58 percent of elderly unmarried women of color, relied on Social Security for 90 percent or more of their total income."

"Even with Social Security," it adds, "12 percent of older women still live in poverty; for widows, the rate is worse, at 15 percent. This is 50 percent higher than the poverty rate for all people 65 and older." The problem is especially severe for women of color. Poverty rates in 2009 were more than 26 percent for African American women who were 75 and older, the paper says, and more than 21 percent for older Hispanic women.

Social Security generally permits a spouse to receive either their own benefits or half their spouse's benefits, whichever is higher. When either spouse dies, the surviving spouse is entitled to continue receiving the higher benefit but must forego the second benefit. A woman who never worked would thus receive half her husband's benefit. On his death, her household income would drop by a third once she began receiving only the higher spousal benefit.

[See Older Women Face Serious Money Inequality.]

Ironically, the surge of women into the workforce has increased the financial impact of a spouse's death. For a husband and wife with similar Social Security benefits, the death of a spouse would reduce the household's Social Security income by 50 percent. "The effect of this reduction can be devastating," the white paper says, "especially for women living alone after age 65, for women of color, who are more likely to be poor, and for women from low earning or wealth-depleted households."

Here are some of the changes the groups propose:

Survivor benefits. Increase the benefit paid to a surviving spouse to an amount that is equal to 75 percent of the total combined benefits that were paid to the couple prior to the spouse's death, capped at the benefit level of a lifelong average earner (roughly $1,585 a month for an individual claiming benefits in 2012 at the age of 66).

Credits for caregivers. Credits would be provided for up to five years for a person caring for young children or family members who are elderly or disabled. The credit would be an imputed wage for caregiving work which, when added to any actual earnings, would total no more than half that year's average annual wage. In 2011, half the annual wage equaled $21,758.

Disabled widows and widowers. This proposal would end benefit reductions, age restrictions, and eligibility time limits, and treat these beneficiaries the same as other people receiving Social Security disability payments.

Student benefits. Restore benefits to children up to the age of 22 instead of the current limit of 19. Such benefits were once permitted, but removed in 1981.

Same-sex married couples and partners. Remove gender from Social Security rules and provide equal benefits to all couples and their children, regardless of the sexes of the couple.

[See AARP Moves to Protect Social Security and Medicare.]

The white paper also sets forth recommendations for increasing the annual cost of living adjustment (COLA) for Social Security, enhancing benefits for low-wage employees, and boosting benefits for all beneficiaries by 5 percent. It opposes privatizing Social Security, raising the retirement age (now set to rise to 67), further limiting payments for higher-income earners, and changing the COLA to a less-generous measure of consumer price changes.

Max Richtman, head of the National Committee, said in an interview that he knows the proposals will not be enacted anytime soon, if ever. But he says defenders of Social Security have spent too much time "playing defense" against conservative proposals to reduce benefits and, in his view, weaken the program.

"We thought it was time for us to put something positive forward," he says. "The other side has been more successful in perpetuating a lot of what I call myths about the program," including fears of its imminent collapse and the needs to curb benefits. With relatively small changes, Richtman and other supporters argue, Social Security benefits can be expanded, not reduced, and people will once again be able to rely on the long-term viability of a vital program.

Heidi Hartmann, president of the Institute for Women's Policy Research and one of three authors of the white paper, says activist groups have long pushed for the changes outlined in the paper. The timing of the proposals makes sense, she notes, because the steep recession has strengthened public recognition of the role of Social Security and support for better benefits.

"People are turning toward Social Security in a new way," she says, and women's groups are likely to make some use of the proposals to support Democratic candidates in the fall elections. "People are ready to go to bat for something," Hartmann says.