By Mary Johnson, editor
Roughly 27% of older single women are at high risk of living in poverty, because they have little other income to augment their Social Security benefits. Single women have it worse in retirement than married couples and men, and are more likely to become impoverished as they age. Most women have lower benefits than men. Women tend to work in lower-paying jobs, get paid less than men, and take time out of the workforce to take care of children and older family members. That can leave zero earnings gaps, or only partial years of earnings for the time out of the work force.
Social Security uses the 35 years of highest earnings to calculate benefits, and Social Security statistics confirm women have lower benefits than men. The average Social Security primary insurance amount for women is 26% lower than that of men — $1,297 for women vs. $1,747 for men. Some proposals have suggested giving Social Security credits to unpaid caregivers to fill in the zeros in Social Security earnings records during years of family caregiving. This would tend to boost initial retirement benefits.
A husband’s death can mean enormous financial hardship for women. Under current law it generally means a big drop in Social Security income, going from two Social Security payments each month to just one. When the husband passes away, the widow gets a benefit that’s 100% the amount the deceased spouse was entitled to, if higher than her own retirement benefit. For example, if the couple received a combined benefit of $2,400 per month, and the husband’s benefit is $1,600, then the widow would just get the $1,600 and lose her own $800 per month in benefits.
One widely-discussed proposal would limit the drop in benefits when a spouse dies to 75% of the couple’s combined benefit. In the example above that would boost the widow’s benefit by $200 per month to $1,800.
To pay for the boost, advocates propose lifting the payroll taxable maximum so that higher earners pay Social Security taxes on their fair share. In 2017 workers pay Social Security taxes on the first $127,200 in income. But the highest earners, like highly paid CEOs, don’t pay anything on earnings over that amount.
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