Summary: Women have benefited greatly from the Social Security program. Many women who work are advantaged by the progressive benefit formula that provides larger relative benefits to those with lower lifetime earnings. Women who did not work or had low lifetime earnings and who were married benefit from the program's spousal and survivor benefit provisions. However, women typically receive lower monthly benefits than men because benefits are based on earnings and the number of years worked. Any across-the-board benefit cuts to restore solvency might fall disproportionately on women as a group because they rely more heavily on Social Security income than men do. Other reform approaches can have positive or negative effects on women depending on how the reforms are designed. Restructuring Social Security to include individual accounts also will likely have different effects on men and women. Because women earn less than men, contributions of a fixed percentage of earnings would put less into women's individual retirement accounts. Available evidence indicates that women also tend to invest more conservatively than men do, and thus would likely earn smaller returns on their accounts. In addition, how such accounts are structure will be extremely important to women. For example, whether individuals will be required to buy annuities with the proceeds of their accounts at retirement and how the annuities are priced could affect women quite differently from men. How benefits might be distributed to divorcees and how accounts are transferred to survivors could critically affect the retirement income of some elderly women. Understanding the potential consequences of the various reform proposals can help ensure that Social Security continues to protect vulnerable groups, such as elderly unmarried women.
