Is Social Security sexist?
That question could spark a spirited debate, but what’s beyond argument is the fact that the now 80-year-old program often leaves women at a disadvantage.
There are numerous reasons for that, many of which exist well beyond the confines of Social Security.
But Laurence Kotlikoff, Boston University economist and co-author of “Get What's Yours: The Secrets to Maxing Out Your Social Security,” says the program clearly was not designed with women in mind.
“Basically it’s a system written by old white guys decades ago,” a time when most women stayed home, raised the kids and marriages didn’t break up as often as they do today, he says.
Kotlikoff believes many Social Security rules harm women more than men. Although the rules apply to both sexes, when you consider that women are still likely to earn less than men and more likely to outlive their husbands, it follows they will likely need it more than men, he says. Instead, they are statistically likely to receive far less.
A few examples of ways he says the program hurts women:
- If an ex-husband takes his retirement benefit early, his former wife gets a smaller widow benefit when he dies. (And since they're no longer married, when he takes his benefit is truly out of her control.)
- A wife who has never been in the workforce can't collect her spousal benefit until her husband files for his retirement benefit, which can be as late as age 70.
- People who remarry lose their right to divorced spousal benefits unless the later marriage ends in death, divorce or annulment. That situation also typically penalizes women more than men.
Mary Beth Franklin, a Social Security expert and contributing editor to InvestmentNews, agrees with Kotlikoff that the system does not treat women fairly.
“I’d say it’s a paternalistic system,” she said. “It was designed for Ozzie and Harriet when the husband was the sole breadwinner and the wife stays home and takes care of the family.”
For its part, the Social Security Administration declined to comment specifically on charges that the rules naturally favor a traditional family with a working husband and stay at home wife. But in a statement, the agency said that it is continuing many education efforts for women and believes it’s important for women to plan for a secure retirement.
The statement said women make up 56 percent of Social Security beneficiaries age 62 and older, and 66 percent of those 85 and older. In 2014, the SSA paid $698 billion to more than 47 million retirement and survivor beneficiaries, many of them women who receive Social Security benefits as a spouse, divorced spouse, or survivor. Social Security lifts nearly 9 million elderly women out of poverty each year.
What can women do?
- Get the 411. Understanding your own situation and educating yourself on when and how to take your benefits is the first step, says Franklin. For married couples, doing everything you can to maximize the higher wage earner’s benefits, such as delaying payments until age 70, can often help wives down the road. Because women are statistically more likely to live longer than men, that maximum benefit will help make sure the wife is provided for through the remainder of her life.
- Pay attention to timing. This is particularly key for divorced women says Jim Blankenship, a financial planner in New Berlin Illinois and author of “A Social Security Owner’s Manual.” He points out that anyone who files early for Social Security benefits will receive a lower payment than if he or she waits until full retirement age (66 for those born between 1943 and 1954). For example, if you’re eligible for your own benefit and a spousal or divorced spousal benefit, Social Security will lower the payment for both benefits, regardless of which one you apply for early.
- Examples make it clearer. Take the example of a divorced retiree age 65 who just left the workforce and has an available Social Security benefit of $1,000 a month on her record and a divorced spousal benefit of the same amount. Whichever she files for, the payment will be reduced to about $930. If she can hold out another year until her full retirement age of 66 she could take the full divorced spousal benefit of $1,000 and delay her own benefit until age 70. That would increase the payment to $1,320. That’s about 40 percent more per month than she would have had if she started at age 65. What’s more, the higher payments will last her lifetime. Says Blankenship, “It pays for women to pay close attention to Social Security strategies.”
- Getting help can pay off. If you’re still not sure which way is the right way to go, paying for a little help can make financial sense. For prices starting at $19.95 (for a basic report) up to $250, socialsecuritysolutions.com will help you figure out the filing strategy that makes the most financial sense for you.