16 more years. A woman age 65 could expect to live to age 84 -- 19 more years. Consequently, women depend on income from Social Security for more years in retirement than do men. The trend of ever-increasing life expectancies appears destined to continue well into the future.
- Women are more likely to be out of the workforce to raise children or care for elderly parents. Therefore, they have more "drop-out" years or "zeroes" used in the Social Security benefit calculation.
- Women earn less money than men. Because of years out of the workforce and because of the historical -- albeit shrinking -- pay gap, women have average lower lifetime earnings than men. With lower earnings, they earn lower benefits under Social Security.
Grassley said individual accounts could benefit women by giving them more control over their government-collected retirement assets. The accounts could be funded with a partial "add-on" to or "carve-out" from the current FICA payroll tax of 12.4 percent, he said. The accounts would be owned by the individual, not the government. Individuals could direct how the money in their accounts would be invested among a small number of different options, Grassley said.
Grassley said individual accounts could benefit women in substantial ways:
- Individual accounts would provide flexibility and ownership of tangible assets. For example, under the current system, two families with the same household income may receive startlingly different retirement benefits. A family in which both spouses have similar lifetime earnings will have lower Social Security benefits than a family in which only one spouse worked outside the home. Individual accounts could help minimize this disparity.
- Individual accounts could help women who leave and return to the workforce. While they are out of the workforce, their investment earnings could allow their account balance to continue to grow. The current system penalizes women who leave a job to care for a child or parent.
- Individual accounts also could improve circumstances after divorce. The Social Security program grants a woman the right to her husband's benefits if the marriage lasted for 10 years, and she did not remarry. Under individual accounts, women could receive a share of their husbands' account even if their marriages did not last 10 years.
Grassley said he looks forward to exploring more options that would improve women's equity under Social Security.
"Saving Social Security presents one of the greatest policy challenges of our time," Grassley said. "We have an opportunity to improve a program that fundamentally affects every American. We can help millions of future retirees build a more secure nest egg. At the same time, we can eliminate many of the inequities that often put women retirees in precarious financial straits. I look forward to the work ahead."
