National coalition calls on Congress to improve Social Security benefits for women

The National Committee to Protect Social Security & Medicare released a report this month urging Congress to improve Social Security benefits for older women who are facing growing income insecurity in their retirement due to lower wages, less access to pensions and 401k plans, and intermittent employments due to child and elderly care responsibilities.  

SOURCE: National Committee on Protecting Social Security & Medicare“The report examines the paradox of women’s increasing role in the workforce while they find themselves economically vulnerable in old age. Women’s lifetime of juggling competing demands of paid work in the labor market with unpaid work in family caregiving means women have less opportunities than men to accumulate assets across their lifespan,” said Dr. Carroll Estes, Chair of the Board of Directors at the National Committee to Protect Social Security & Medicare.

While many lawmakers on Capitol Hill are talking about “reforming” – meaning cutting or even privatizing – Social Security to balance the federal deficit, the NCPSSM’s report illustrated the human and economic costs that will be disproportionately borne by women should Social Security benefits be reduced instead of enhanced.

The report, “Breaking the Social Security Glass Ceiling: A Proposal to Modernize Women’s Benefits”, found that older women depend more on Social Security to keep them out of poverty in their retirement than men. Nearly half – 46% – of elderly women depend on Social Security for 90% or more of their retirement income; that rate jumps to 58% for elderly women of color.

Lower wages and sporadic employment throughout their working life also mean that women generally receive less Social Security benefits than men. In 2009, the average Social Security income for women was $12,155 compared to $15,620 for men – about 30% lower.

“We know that the wage gap persists. Women on average are paid only 77 cents to the dollar paid to men. And for women of color, it’s far worse. I think the numbers are around 69 cents to the dollar for African-American women and just 59 cents to the dollar for Latinas,” said Terry O’Neill, President of the National Organization for Women, who supports NCPSSM’s proposed reforms. “[At] 59 cents to the dollar, and no pension and you’re having to come out of pocket for your health care throughout your working life and you don’t even have a 401k, how are you going to save for your retirement years? And the answer is you’re not actually going to save the money. So Social Security is the solution. By the time a woman reaches the end of her working career, what she really has is Social Security.”

But cutting Social Security benefits, as many so-called “deficit hawks” have proposed, will push many older women into poverty.

Of the 20 million women who received Social Security benefits in 2009, 12% of women over the age of 75 live in poverty but the poverty rate is doubled for women of color. NCPSSM reported that 26.1% of African-American women over the age of 75 live in poverty and 21.4% of Hispanic women in the same age group live in poverty even with their Social Security benefits.

NCPSSM estimated that nearly half of the women who receive Social Security income will be forced into poverty if the program is severely weakened or dismantled.

“Politicians and other public figures who claim that Social Security is the problem – that it’s going broke, that it’s in crisis, and therefore we need to cut it – are not being straight with the American people,” said O’Neill. “If it is in trouble, the responsible thing for elected officials to do is to fix the problem in a way that allows us to use Social Security and strengthen Social Security and make it better, not cut it back and begin the process of dismantling it.”

Instead of cutting Social Security, the NCPSSM coalition, which includes NOW and the Institute for Women’s Policy Research, argued that Congress should be looking at increasing benefits as older Americans face financial trouble in their retirement years as a result of the Great Recession of 2007 – 2009.

Read more: Older Americans hit hard by the Great Recession

“We have had the worst recession since the 1930s. Lots of people have lost a lot of assets. Income from assets is virtually zero if you invest in very safe assets – it’s pretty much zero right now. The effect of this recession is going to last a very long time in terms of people’s income. So we would say now is a very good time to increase the basic benefit,” said Dr. Heidi Hartmann, President of the Institute for Women’s Policy Research.

Some of the proposals outlined in the NCPSSM report to enhance Social Security benefits and improve retirement security for women include:

  • Providing Social Security credits for caregivers, such as women who left the workforce to care for their children, elderly parents, or disabled relatives. Interruptions in employment “can lead to a significant reduction in the amount of a woman’s Social Security benefit.” The credits would be granted for up to 5 years. “Let’s say you are married and you do take a lot of time out of the workforce because of raising children or for elder care and now your own work record is now depleted because you aren’t even earning or you’re earning less because you are caregiving, so our proposal here is to assign an amount of money to your earnings record – half the median wage, which would be about $22,000 in 2011, $22,000 which is half the median wage – and you would be given five years of that earnings on your earnings record. It’s something that will be put on there. This is called a caregiving credit. And it could also be done for those who cared for the disabled or those who cared for the elderly who need special attention – frail elderly,” explained Hartmann. “And this would help a man or a woman who does caregiving to build up their own work or credit even though they weren’t able to work as much as they would have had they not been doing caregiving.”
  • Giving surviving spouse 75% of the total combined Social Security benefits paid to the couple prior to the spouse’s death. The way the current survivor’s benefit is structured, a widow could her Social Security income drop by 33% to 50% when her husband dies. For example, if both the husband and wife worked full-time, each could collect $1,500 a month in benefits, bringing their combined total to $3,000 a month. However, if the husband dies, then the wife is left with only $1,500 and no widow’s benefits if “her own Social Security benefit is equal to her husband’s benefit.” That means she will see a 50% reduction in her household income. “Providing a widow, widower or surviving divorced spouse with 75 percent of the couple’s combined benefit treats one-earner and two-earner couples more fairly and reduces the likelihood of leaving the survivor in poverty,” the report explained. But the monthly benefits would be capped at the same benefits given to a lifelong average earner, which is approximately $1,580 a month for someone retiring at age 66 this year.
  • Raising the minimum benefits for people who work in low-wage jobs most of their lives. “If you worked a very low-wage all your life, your benefits might be very, very small. So if you earn at least $12,000 a year for 30 years, you can get a fabulous benefit of $795 a month now, and that’s not even the poverty level,” said Hartmann. “So our proposal is to increase that minimum benefit up to about $1,400 a month. So we would be almost doubling it and you have to have 30 years to get that full value, but with 10 years you would get something.” She added, “To this minimum we also want to add caregiving benefit years and we would add 10 years. This would mean that if you have no work history at all but you did provide caregiving for 10 years, you would be able to get this minimum benefit – it would be about $400 a month. And that could be very, very important to some retired people who have no other access to benefits.”
  • Calculating the Cost of Living Adjustments (COLA) using the consumer price index for the elderly (CPI-E). Currently, the COLA is calculated using the standard CPI to adjust for inflation. However, the CPI-E more accurately represents the purchasing patterns of older Americans, in particular, health care costs.  “We’ve heard a lot in recent years about how much the increase is in health care costs are taking out of the pockets, especially of the elderly who have more health care costs,” said Hartmann.


Read more: Analysis: Reforms needed to ensure sustainability of Social Security & Medicare

The NCPSSM’s report also outlined several ways to pay for these benefit improvements. The primary method is to remove the $110,100 income cap on Social Security contributions.

“Did you know there is a cap on earnings in terms of how much you pay Social Security on those earnings? It’s capped at $110,000 right now – and you pay 6.2% on that and your employer pays the same amount. That means if you earn more than that, you’re not paying anything on that money above that amount,” said Hartmann. “That’s not true of Medicare – you pay on the whole salary. So we’d like to see Social Security be treated the same way as Medicare and have everyone pay no matter their earnings.”

The second proposal to pay for the improvements is to increase Social Security tax rates by 0.05% every year for 20 years. “Scheduling a gradual increase in the Social Security payroll tax rate by a very small percentage…and phasing it in over a long period of time would significantly strengthen Social Security’s financial condition, both now and well into the future,” the report stated.

Lastly, the report proposed to subjecting worker contributions to flexible spending accounts for health care to Social Security taxes.


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