The Gerontological Society of America
1030 15th Street NW, Suite 250
Washington, DC 20005-1503
Voice: (202) 842-l275
E-mail: geron@geron.org
To: President Clinton. Congress. and the White House Conference on Social Security
From: Lou Glasse, Carroll Estes, and Timothy Smeeding on behalf of the GSA Task Force on
Older Women's Project, "Older Women and Social Security."
We are pleased to present you with an introduction to our project.
funded by The Retirement Research Foundation of Chicago, which will
be assessing the impact of emerging Social Security reform packages
on women. This as an opportunity to both put the Social Security
system on more solid financial ground and to make it more responsive
to the needs of its largest constituency-older women. In the space
allotted we will present a few of the current and expected future
facts about women and the way that they guide our thinking about
Social Security reform.
I. Facts
- Women make up over 60 percent of all Social Security beneficiaries.
More than two in three persons age 75 and over, and almost three
in four persons 85 and older. are women. Because the fraction of
the population 85 and over are the fastest growing age group among
the old, their economic needs are of particular importance.
- Older women rely more heavily in Social Security than do men.
Elderly unmarried women, including widows. divorcees, and never
married women get over half of their incomes from Social Security.
This fraction rises with age, rises among older women living alone.
and also rises as overall incomes decline. For instance, 80-84 year
old widows with below median incomes rely on Social Security for
more than 80 percent of those incomes.
-
Older women live in a much
less advantageous economic situation than do older men. Three of
every four poor elderly persons are women. Poverty rates are highest
among divorced women, widowed women, and never married women - all
20 percent or more - compared to a poverty rate of 5 percent for
married women. Moreover. if we tallow the National Academy of
Science recommendations and adjust incomes for taxes. in kind
benefits and for out of pocket expenses for health care. the poverty
rate for all older women living alone rises to 31.5 percent.
- As times change and women's work histories improve. more women will
collect private pensions and Social Security benefits based on
their own earnings. Still. the Social Security Administration
projects that the percentage of all women beneficiaries who receive
benefits based on their own earnings will rise only from 37 percent
in 2000 to 56 percent in 2030.
Hence, nearly half of all elderly women will continue to rely on
their husband's Social Security benefits. Future older women will
rely more heavily on their own pensions, and hopefully, on their
husband's pensions under joint and survivor's options. However.
women are far less likely than men to qualify for private pensions
(30 percent vs. 48 percent, in 1994). Even when women do receive
their own pensions, they qualify for benefits that are only about
half the median benefits received by men. Finally, about one third
of husbands still do not elect joint and survivor options for their
private pensions upon retirement, despite federal legislation to
increase such determinations.
- Social Security benefits provide inflation adjusted income
protection not found in other types of pensions which are fixed in
nominal terms and which therefore depreciate rapidly over the 20
year or longer period of older womens' retirement lives. From
December 1982 to September 1988, the Bureau of Labor Statistics
experimental price index for elderly consumers rose 73.9 percent
compared to a 63.5 percent increase in the official consumer price
index used to adjust Social Security benefits for inflation mainly
because if higher costs for health care.
II. Reform Implications
These facts and others, which will be gathered as part of our
project. suggest that the following Social Security reform issues
are most salient to older women:
- Benefit adequacy, retirement income security, and the social
insurance features of Social Security must be maintained or improved.
Social Security is the only progressive formula, defined benefit,
inflation adjusted income source available to women, particularly
widowed and divorced spouses, disabled workers. and mothers with
children of deceased workers. Above all else, this fact cannot be
compromised by reform schemes which put greater weight on individually
controlled. defined contribution reform options for Social Security.
- Social Security survivors' benefits are the key feature of older
women's economic well being for the 15.3 years in old age the
average female survivor spends as a widow. Survivors' benefits
are crucial to the economic well being of spouses with lower lifetime
earnings. Today, 74 percent of elderly widows receive benefits
based on the earnings of their deceased spouse. While this fraction
will most certainly decline in the future, about half of widows
will still depend largely on their husband's benefits in old age.
Survivors' benefits should be strengthened. not weakened by Social
Security reform. We are opposed to any plan which allows withdrawal
of Social Security funds prior to retirement or which does not
mandate considerable benefits for divorced or surviving spouses.
We favor plans that would provide a lower initial spouse benefit
upon retirement in return for a higher survivor benefit upon death
of a spouse.
- The effect of Social Security reform on older women must be
considered in the context of other likely changes in private pensions
and Medicare that will take place over the next few decades. The
already high burden of out of pocket health care costs for older
women will likely rise relative to their incomes. thus putting
greater pressure on Social Security to help pay these costs,
particularly for low income women. Steps should also be taken to
further strengthen survivors benefits options in private pensions
that mainly benefit older women.
- Inflation protection is an important component of economic
security for older women, particularly very elderly women who will
continue to rely heavily on Social Security as their major income
source. Social Security reformers should be wary of any formula
which arbitrarily reduces cost of living adjustment without
consideration of the cost of goods and services purchased by the
elderly, particularly by the oldest of the old who are predominantly
women. In fact, Social Security reformers should consider adoption
of a cost of living index that is explicitly tailored to older
Americans and their consumption needs.
We fully realize that Social
Security reform will inevitably require benefit reductions or tax
increases. However these changes are structured, we ask that you
consider their effect on older women and the social insurance.
benefit adequacy, and retirement income security concerns which
they and their families hold most dear.
|
