Jane Wollman Rusoff, one of our top personal finance journalists, just penned this column in Think Advisor entitled Kotlikoff: How Social Security Rules Punish Women. Social Security’s rules are nominally sex blind. But because women still earn less than men in the workplace and have shorter work spans due to raising children, the effect of the system’s regs are highly sexist.
As you’ll read in Jane’s piece, I’m probing for the root cause of the systematic mistreatment of women. Here are 19 specific reasons, reproduced from a 2015 PBSNewsHour column, why I view Social Security as sexist. (There were 20 reasons, but one was eliminated in the 2015 legislation.)
Social Security’s rules were mostly written in the 1950s, ’60s and ’70s when women were supposed to “know their place,” — namely stay at home, clean the house, make supper, bring up the kids, remain monogamous, and, in the case of divorce, don’t remarry. The rules are also very generous to new wives, especially younger new wives.
My definition of sexism here is that the rules are more likely to harm women than men.
19 Sexist Social Security Rules, Provisions, and Outcomes
You need to be married at least 10 years to collect divorcee spousal or divorcee widow benefits.
If you get divorced, you can’t collect child-in-care spousal benefits based on your care of young or disabled children unless you are older than 62.
If you remarry, you lose your right to divorcee spousal benefits.
If you remarry before age 60, you lose your right to divorcee widow benefits.
Take two wives, A and B. They both have high-earning husbands who earn the same amount. Wife A doesn’t work a day in her life and pays not a penny in Social Security taxes. Wife B works every day of her life and pays 12.4 percent of every dollar she earns to Social Security. Wife A and wife B can collect exactly the same benefits, i.e., wife B may get absolutely nothing back for paying all those FICA taxes month after month.
In the above, if wife A’s husband earns more than wife B’s, wife A can end up with more benefits than wife B even though she hasn’t paid a penny into the system.
If the ex-husband takes his retirement benefit early, the wife gets a smaller widow benefit when he dies.
A wife can’t collect her spousal benefit until her husband files for his retirement benefit, which can be as late as his reaching age 70.
An ex-wife can’t collect her divorcee spousal benefit until her ex is 62 and she’s been divorced two or more years (unless her ex has filed for his retirement benefit).
Delayed retirement credits are not provided for spousal, divorcee spousal, widow, or divorcee widow benefits if the beneficiary is waiting to claim them until after full retirement age.
Thanks to the family benefit maximum, an ex-husband that has children with his new wife will reduce the child benefits available to children from prior wives.
Because they accumulate less wealth by retirement, women are less likely than men to be able to afford to wait to collect far higher retirement benefits.
Wives that are four or more years younger than their husbands never have to wait beyond full retirement age to collect full spousal benefits.
Husbands can get their new wives spousal benefits after being married for only one year.
Husbands can get their new wives’ widow benefits by being married for just nine months.
Women are disproportionately employed as teachers and other state workers in non-covered employment. Their SS benefits are substantially docked (via the Windfall Elimination and Government Pension Offset provisions) due to receipt of pensions from non-covered employment.
Those who earn above the taxable ceiling after age 60 — mostly men — get automatic benefit increases each year they work.
If you work and lose your child-in-care spousal benefit, or your mother’s benefit due to the earnings test, there is no compensation in the form of higher benefits after full retirement age.
If you are a high-earning woman and take time off to have children, the years of zero earnings won’t be filled in with earnings above the taxable ceiling arising in the years you earn above the ceiling.
Congress needs to eliminate these provisions and practices. One part of such reform would entail entering half of a married couple’s combined covered earnings into each spouse’s earnings record. Thus, a spouse who gets divorced 9 years and 364 days after getting married and stayed at home to raise children would exit the marriage with the same claims to future benefits as the spouse who formally works.
PS, Get What’s Yours — the Secrets to Maxing Out Your Social Security Benefits and/or maximizemysocialsecurity.com are two resources to protect yourself against Social Security. Protect yourself? Yes, protect yourself! And this is coming from a major fan of Social Security!
Laurence Kotlikoff is a Boston University Economist, a NY Times Best Selling Author, President of maxifi.com, and Author of Money Magic.
Good point, but conditional on reaching 60, survival probabilities are not so different between men and women. I'm not claiming that the entire system is underpaying women. I'm saying that there are a lot of specific sexist provisions that impact a large number of women (and sometimes men) in particular circumstances. best and thanks, Larry
I hate that those already on SSD cannot collect their spouses benefits without totally reapplying for SSD unless age 60. They make us go through it all again, and then deny the spousal portion