On July 25, 2012, LaTina Burse Greene, Assistant Deputy Commissioner For Retirement and Disability Policy, Social Security Administration, testified before the Senate Special Committee on Aging about the importance of the Social Security retirement decision and how it affects women. While her testimony contains valuable information for everyone, she outlined some program features of Social Security that are particularly important to women. 

Two excerpts from her testimony follow. Each of these two sections is shown in full but this is not her full testimony. 

Social Security Protection For Women

I would like to begin by outlining some of the program features of Social Security that are particularly important to women. Although Social Security program is gender neutral—individuals with identical earnings receive the same benefits— some elements of the program are particularly helpful for women for several reasons. First, women tend to live longer; second, women generally have lower lifetime earnings than men; and third, women often retire with smaller pensions and other assets than men.  

Currently, women represent 57 percent of all Social Security beneficiaries aged 62 and older and approximately 68 percent of all such beneficiaries aged 85 and older. In addition, because of their greater longevity, women have a greater chance of exhausting other sources of income. Income from other retirement programs and savings may run out, but Social Security benefits continue for life.

One important feature is the benefit formula. Since the Social Security program’s inception in 1935, the benefit formula was structured to replace a larger portion of pre-retirement earnings for lower earners than for higher earners. 

Another important feature is the automatic cost-of-living adjustment provision (COLAs), enacted in 1972, to maintain the purchasing power of benefits. This COLA feature is particularly important for women because of their greater life expectancy.  

A third feature is that family members of retired, disabled, and deceased workers are eligible for benefits as well. In addition to potential eligibility for benefits as a retired or disabled worker, women may be eligible for benefits as a spouse, divorced spouse, or widow. These benefits are especially important to women because they are more likely to receive spouse’s or widow’s benefits due to their lower lifetime earnings, and many times women are eligible for spouse’s or widow’s benefits in addition to benefits they receive based on their own earnings. In other words, women may be entitled to benefits based not only on their own work and earnings, but on the work and earnings of a spouse. In addition, as women’s participation in the workforce increases, disability coverage becomes more prevalent and more important to financial security.  

Our Research on Challenges Facing Women  (not included here, this portion of her testimony includes endnotes with source references)

We conduct extensive research about the role of Social Security in women’s retirement security and the challenges they face. I would like to mention some important themes from our research include:

Women are more reliant on Social Security for retirement income than men.

• In 2010, Social Security comprised an average of 54 percent of women’s (65 or older) family income and at least 90 percent of the income of 26 percent of these women.

• Among women 80 or older in 2010, Social Security comprised an average of 63 percent of women’s family income and at least 90 percent of the income of 35 percent of these women

• Social Security spouse and survivor benefits are a particularly important source of retirement income. At the end of 2010, 12.9 million women Social Security beneficiaries aged 62 or older (54 percent) received at least part of their benefit as wives or widows of entitled workers.

However, demographic changes in the population are reshaping the types and amounts of Social Security benefits women may receive, which may have an important effect on their retirement income.

• A growing tendency toward never marrying, along with shorter marriages before divorce, may foreshadow a decline in women’s eligibility for spouse or widow benefits in future years. This trend may have particularly marked effects for certain minorities or economic groups.

• At the same time, rising labor force participation among women means that they are more likely to qualify for Social Security benefits based on their own earnings record. However, due to continued earnings differences between men and women, many of these women will continue to rely on widow’s benefits if they outlive their husbands.

Despite increased labor force participation and earnings, women still face unique challenges in accumulating retirement resources.

• Women tend to have lower contribution rates to retirement savings accounts, such as in 401(k) plans and IRAs. Women’s concentration in lower-wage or part-time jobs contributes to this.

• Analysis of national survey data has revealed that younger single women are less likely than single men or their married counterparts to view retirement as an important reason to save, and are less likely to have an IRA account or participate in a defined-contribution pension plan. This may lead to lower accumulation of retirement resources.

In addition, we recently conducted a study using our microsimulation model that highlights the impact of changes in married women’s earnings on the types of Social Security benefits that women will receive over the next several decades. The projections suggest that because women’s earnings are increasing, a greater share of beneficiary wives from more recent birth cohorts will be eligible for Social Security benefits based on their own earnings record. However, the majority of these women are projected to continue to receive widow benefits due to having lower lifetime earnings than their husband. Thus, surviving spouse benefits are likely to continue to play a critical role in the retirement security of future beneficiary women. 

Read the complete statement of LaTina Burse Greene, Assistant Deputy Commissioner For Retirement and Disability Policy, Social Security Administration before the Senate Special Committee on Aging at http://www.socialsecurity.gov/legislation/testimony_072512a.html.