Social Security Reform

Elderly unmarried women are much more likely to be living below the poverty line. Twenty-two percent of unmarried elderly women have income below the poverty threshold, compared with 15 percent of unmarried elderly men and only 5 percent of elderly married couples. Under current Social Security law, women tend to receive lower financial benefits than do men, primarily because they usually have lower lifetime earnings and work fewer years. Women's experiences under pension plans also differ from men's not only because of earning differences but also because of differences in investment behavior and longevity. Moreover, public and private pension plans do not offer the same social insurance protections that Social Security does. The Social Security Advisory Council's reform proposals aimed at resolving future financial problems confronting the system contain elements that may exacerbate the differences in benefits. For example, proposals that call for individual retirement accounts will pay benefits that are affected by investment behavior and longevity. Expected changes in women's labor force participation rates and increasing earnings will reduce but probably not eliminate these differences.

GAO noted that: (1) its work shows that, despite the provisions of the Social Security Act that do not differentiate between men and women, women tend to receive lower benefits than men; (2) this is due primarily to differences in lifetime earnings because women tend to have lower wages and fewer years in the workforce; (3) women's experience under pension plans also differs from men's not only because of earnings differences but also because of differences in investment behavior and longevity; (4) moreover, public and private pension plans do not offer the same social insurance protections that Social Security does; (5) furthermore, some of the provisions of the Social Security Advisory Council's three proposals may exacerbate the differences in men and women's benefits; (6) for example, proposals that call for individual retirement accounts will pay benefits that are affected by investment behavior and longevity; and (7) expected changes in women's labor force participation rates and increasing earnings will reduce but probably not eliminate these differences.