Saturday marks the 75th anniversary of the signing of the Social Security Act by President Franklin Roosevelt. Social Security is the greatest source of retirement income for most Americans, and it significantly benefits older women, widows, children, disabled workers, and retirees. Without Social Security benefits, more than half of older women would fall into poverty, but even with Social Security, the poverty rate for women 65 and older is much higher than the poverty rate for men of that age. Many more women than men also receive spousal and widow benefits through the program.
Because of the economic downturn — and despite the growing need for benefits due to longer life expectancies — Social Security has become a new political target. In February, President Obama established a new bipartisan commission focused on the national debt. Social Security is a point of contention, and many advocacy groups have begun campaigns urging legislators to strengthen it.
Young people often scoff at the idea that we’ll have any Social Security benefits left by the time we retire. It is more critical than ever to take time to plan out finances and look into retirement security, instead of being discouraged by it.
Women must especially look into their retirement security. We all know that women continue to earn, on average, 77 cents for every dollar men earn. This pay inequity continues in retirement because women have less savings and pensions, and women cannot save money they do not have.
Because they tend to spend fewer years in the workforce due to caretaking responsibilities and part-time work, women are less likely to receive a defined-benefit pension. Although the current Social Security benefit formula compensates women for lower lifetime earnings by providing a higher return of income for lower-income workers, it’s not enough to make up for the substantial amount of time women are out of the workforce, and it can’t offset the fact that women are also unlikely to be making pension or retirement savings investments during their displacement.
Women need to consider that life plans change. In the case of divorce or death, women’s lives drastically change. Because many women think they can rely on their husband’s pension, they may forgo any retirement planning. Both of these situations can leave them extremely vulnerable.
Divorce often leaves women financially distressed, and divorced women are an increasing part of the elderly population. In the case of a husband’s death, a wife may receive survivor’s benefits or nothing at all, but in any case her income is significantly reduced. AAUW is also strongly against privatizing Social Security, as this would endanger guaranteed benefits women need. Social Security needs to be strengthened, not weakened through privatization.
On this anniversary of Social Security, take some time to review your own financial situation. Then take some time to appreciate the importance of this program and dedicate efforts to the program’s preservation. Urge your legislators and the National Commission on Fiscal and Financial Reform to protect Social Security. For more information, read our position paper on women and retirement security, and stay tuned for the release of our Social Security Matters Program in a Box.
This post is by Jennifer Schwope, AAUW Public Policy Fellow. Jenny is a senior at the College of St. Benedict in central Minnesota. She is pursuing a dual degree in Political Science and Gender and Women’s Studies with a Management minor.
