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Social Security Reform: A Budget Neutral Approach to Reducing Older Women's Disproportional Risk of Poverty

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Author Info

  • Richard V. Burkhauser
  • Timothy M. Smeeding

Abstract

Perhaps the single greatest achievement of social policy in the United States over the last three decades has been reducing poverty in old age. The transition from work to retirement is no longer economically perilous for the vast majority of older American workers. For most married couples, the risk of falling into poverty even several years after retirement is small. But when one partner of the marriage dies, the survivor faces another much more risky economic transition. The single greatest risk of falling into poverty in old age now comes after the death of a spouse, as the survivor faces life after marriage. And this risk disproportionately affects older women, who are nearly three times as likely as older men to be widowed (49 percent to 14 percent) and can expect to remain widowed an average of 17 years. Here we document the disproportionate risk of poverty faced by such survivors and show that the Social Security system in the United States has been much less successful in protecting single older people from poverty, especially single older women, than government-administered social security systems in other post-industrialized countries. We argue that this lack of success stems in part from the failure of the Social Security program to transform the basis for its payout rules from a "traditional" one-earner family model to a model more consistent with today's families in which both the husband and wife work. We then offer a budget neutral plan to redistribute some of the benefits a married couple receive over their lifetime from the years they are both alive to the years following the death of a spouse, which we argue would substantially reduce the risk of poverty faced by older women.

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File URL: http://www.maxwell.syr.edu/uploadedFiles/cpr/publications/pb2.pdf
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Bibliographic Info

Paper provided by Center for Policy Research, Maxwell School, Syracuse University in its series Center for Policy Research Policy Briefs with number 2.

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Length: 22 pages
Date of creation: Nov 1994
Date of revision:
Handle: RePEc:max:cprpbr:002

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  1. Kathryn Anderson & Richard V. Burkhauser & Joseph F. Quinn, 1986. "Do retirement dreams come true? The effect of unanticipated events on retirement plans," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(4), pages 518-526, July.
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Cited by:
  1. Madonna Harrington Meyer & Douglas Wolf & Christine Himes, 2005. "Linking Benefits To Marital Status: Race And Social Security In The Us," Feminist Economics, Taylor & Francis Journals, vol. 11(2), pages 145-162.
  2. Michael Hoy & Michael Ruse, 2008. "“No Solution to This Dilemma Exists”: Discrimination, Insurance, and the Human Genome Project," Working Papers 0808, University of Guelph, Department of Economics and Finance.
  3. James P. Smith, 1997. "The Changing Economic Circumstances of the Elderly: Income, Wealth, and Social Security," Center for Policy Research Policy Briefs 8, Center for Policy Research, Maxwell School, Syracuse University.
  4. Kathleen McGarry & Robert F. Schoeni, 2003. "Medicare Gaps and Widow Poverty," Working Papers wp065, University of Michigan, Michigan Retirement Research Center.
  5. Madonna Harrington Meyer & Douglas A. Wolf & Christine L. Himes, 2006. "How Will Declining Rates of Marriage Reshape Eligibility for Social Security?," Center for Policy Research Policy Briefs 33, Center for Policy Research, Maxwell School, Syracuse University.
  6. Peter Diamond, 1998. "The Economics of Social Security Reform," NBER Working Papers 6719, National Bureau of Economic Research, Inc.
  7. Kyo-seong Kim & Yongwoo Lee & Yu-jeong Lee, 2010. "A Multilevel Analysis of Factors Related to Poverty in Welfare States," Social Indicators Research, Springer, vol. 99(3), pages 391-404, December.
  8. Timothy M. Smeeding, 1999. "Social Security Reform: Improving Benefit Adequacy and Economic Security for Women," Center for Policy Research Policy Briefs 16, Center for Policy Research, Maxwell School, Syracuse University.
  9. Steven H. Sandell & Howard M. Iams, 1997. "Reducing women's poverty by shifting social security benefits from retired couples to widows," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 16(2), pages 279-297.

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