Working Wives Reduce Social Security Replacement Rates

Posted: 9 Mar 2010

See all articles by Alicia H. Munnell

Alicia H. Munnell

Boston College - Center for Retirement Research

Geoffrey Sanzenbacher

Boston College Economics Department

Mauricio Soto

International Monetary Fund (IMF)

Date Written: October 2007

Abstract

The general perception is that the Social Security program expanded significantly in the 1970s and today benefits are much higher relative to pre-retirement earnings than they were prior to that expansion. Indeed, the Social Security Trustees Report shows that the replacement rate benefits as a percent of pre-retirement earnings for the average worker rose from about 30 percent in 1970 to about 40 percent in 1980, where it remains today.

Most people, however, retire as married couples, sharing and replacing a common household income. Thus, to understand the role of Social Security in the nation's retirement income system, it thus is crucial to consider the replacement rate of couples as opposed to single individuals and how that rate has changed over time. Indeed, the increasing labor force participation of married women has led to a significant reduction in the replacement rates for couples. Combining the rising replacement rates for individual workers with the declining replacement rates for couples shows the 1970s expansion of Social Security to be less dramatic than generally thought...

Suggested Citation

Munnell, Alicia and Sanzenbacher, Geoffrey and Soto, Mauricio, Working Wives Reduce Social Security Replacement Rates (October 2007). Available at SSRN: https://ssrn.com/abstract=1118486

Alicia Munnell (Contact Author)

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States
617-552-1762 (Phone)

Geoffrey Sanzenbacher

Boston College Economics Department ( email )

United States

Mauricio Soto

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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