The mathematics experts who make insurance and pension products work are trying to help policymakers in Congress and federal agencies understand why many experts believe Social Security is less helpful to women than to men.
Members of the social insurance committee at the American Academy of Actuaries, Washington, have prepared an issue brief on the gender-related differences that can hurt women’s Social Security benefit levels and overall level of retirement security.
Even though Social Security applies the same rules to women that it applies to men, differences in employment histories, earnings, disability, life expectancy and marital status all can contribute to differences in Social Security benefits, the actuaries write in the AAA brief.
Women tend to earn less than men, they are more likely than men to have breaks in employment, and they are more likely to leave the workforce entirely, the actuaries write.
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Women who become disabled are less likely than men to have disability coverage, and they are more likely than men to be single, widowed or divorced in retirement, the actuaries write.
In addition, the actuaries write, women tend to live longer than men and therefore need more assets in retirement.
Perhaps, because Social Security was set up when men were the primary wage earners, “situations frequently arise where Social Security provides lower benefits for the same contributions,” the actuaries write. “The system provides the highest benefits relative to contributions to married couples with a primary wage earner, generally the husband, and their children.”
The actuaries discuss how various proposals for strengthening the solvency of the Social Security system would affect women. Options analyzed include moves to change the number of career years that would go into computations of an individual’s benefits; across-the-board reductions in benefits; changes in the benefits formula; efforts to index the Social Security retirement age to life expectancy; changes in spousal benefits rules; and enhancements in benefits for low earners with long careers.
The actuaries also discuss the risks, including disability risk, inflation risk and longevity risk, that would face women if the United States went ahead with proposals to put some Social Security assets in individual accounts.