Consider, for instance, the problem of the outdated “dual entitlement rule.” The architects of Social Security designed the program so that at the time of retirement the spouse with the lower lifetime earnings (usually the wife) would receive either a benefit equal to her own earnings or half of her spouse’s benefits. At a time when far fewer women worked outside of the home, this may have made sense. But today stay-at-home spouses who are not contributing financially to Social Security are benefiting at the expense of women working outside of the home, who are required to pay Social Security taxes but don’t receive any additional benefits. And this design is particularly pernicious for certain subgroups, like African American women, who are less likely to be married than white women.
But the problems are even more extensive. In 1935, divorce was far less common than it is today. Still the structure of the program has not kept pace. Divorced women then and now must have been married for 10 years in order to receive Social Security benefits based on her former-husband's earnings. That may have seemed generous in the 1930s, but today millions of women who find themselves in bad marriages are penalized by this policy.
Widows are another group that suffers under the current structure. A woman who loses her husband has a choice to receive the greater of either her husband's benefit or her own. Again, at the time of Social Security’s inception, far fewer women were contributing outside of the home; but today many working women will find their income at the time of retirement cut dramatically despite years of two-spouses paying into the system.
And single, working women without children who die prematurely receive the harshest punishment. The state reclaims all of their contributions to Social Security, without an option to leave savings to other relatives, friends or charity. ?
The solution for women is not more ”wealth distribution;” rather, women need a retirement plan that reflects the changing roles of women and the American family in the 21st century. Individual retirement accounts would give women control over their savings and bring much higher returns that they can pass on to family or charity. What’s more, they would also decrease Americans’ dependence on the federal government, lower the national debt, and restore the long-term solvency of Social Security.Women want what we all want today; the freedom to save and invest in a way that reflects the needs of our family and plans for the future.