Proposal Would Reduce Widows’ Poverty
When a spouse passes away, widows are more much more vulnerable to poverty than married women. The poverty rate for widows ages 65 and up is three times higher than it is for married women — about 15%. A key reason why widows end up poor is the loss of Social Security income when the husband dies.
Widows are entitled to receive a Social Security survivor’s benefit that’s equal to 100% of what her spouse received, or her own retirement benefit, whichever is higher. This policy cuts the couple’s former Social Security benefit to as much as one-half.
High medical costs and bills frequently accompany this drop in income. A recent study by the Centers for Retirement Research at Boston College says that husbands of women who eventually become widowed, often reported poor health going back as many as 10 years before their death. Poor health is associated with reduced ability to work, meaning lower household income prior to retirement. Such households face higher-than-average medical expenses over many years, depleting retirement savings, and further contributing to poverty of widows.
Researchers found that one way to improve the adequacy of widow’s benefits would be to increase the surviving spouse’s benefit to 75% of the couple’s combined monthly benefit when both spouses were alive. For a one-earner couple, the widow’s benefit would increase from 67% to 75% of the couple’s benefit. For a two-earner couple with similar earnings histories the surviving spouse’s benefit would increase from roughly 50% to 75%.
Sixty percent of participants in TSCL’s 2018 Senior Survey support improving the adequacy of survivors benefits in this way. This type of change could be financed through making the Social Security payroll tax more equitable, and by applying the payroll tax to a greater portion of, or all, wages.
Have you experienced a loss of income when a spouse died? TSCL would like to hear about your experience. Your story can help inform the public and Members of Congress of the challenges facing today’s older women when a spouse passes away. Submit your comment here!
Source: “Modernizing Social Security: Widow Benefits,” Alicia H. Munnell and Andrew D. Eschtruth, Center for Retirement Research at Boston College, September 2018, Number 18-17.