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

22 Pages Posted: 30 Apr 2011

See all articles by Richard V. Burkhauser

Richard V. Burkhauser

Cornell University - Department of Policy Analysis & Management (PAM); University of Melbourne, Melbourne Institute

Timothy M. Smeeding

University of Wisconsin - Madison

Date Written: November 1, 1994

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.

JEL Classification: H55, I38, J14, J16

Suggested Citation

Burkhauser, Richard V. and Smeeding, Timothy M., Social Security Reform: A Budget Neutral Approach to Reducing Older Women's Disproportional Risk of Poverty (November 1, 1994). Available at SSRN: https://ssrn.com/abstract=1824592 or http://dx.doi.org/10.2139/ssrn.1824592

Richard V. Burkhauser (Contact Author)

Cornell University - Department of Policy Analysis & Management (PAM) ( email )

120 Martha Van Rensselaer Hall
Ithaca, NY 14853
United States

University of Melbourne, Melbourne Institute ( email )

Level 5, FBE Building, 111 Barry Street
161 Barry Street
Carlton, VIC 3053
Australia

Timothy M. Smeeding

University of Wisconsin - Madison ( email )

1180 Observatory Drive
Madison, WI 53706
United States
608-890-1317 (Phone)
608-265-3119 (Fax)

HOME PAGE: http://www.lafollette.wisc.edu/facultystaff/smeeding-timothy.html

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