How Do Trends in Women's Labor Force Activity and Marriage Patterns Affect Social Security Replacement Rates?

Social Security Bulletin, 73(4): 1-24, 2013

24 Pages Posted: 16 Nov 2013 Last revised: 25 Apr 2015

See all articles by April Yanyuan Wu

April Yanyuan Wu

Mathematica Policy Research, Inc.

Nadia S. Karamcheva

Urban Institute; Boston College - Center for Retirement Research

Alicia H. Munnell

Boston College - Center for Retirement Research

Patrick J. Purcell

U.S. Social Security Administration

Date Written: November 15, 2013

Abstract

This article examines how women's increased labor force participation, increased earnings, and reduced marriage rates affect Social Security replacement rates over time. Based on data from the Health and Retirement Study and Modeling Income in the Near Term, our estimates show that Social Security replacement rates have dropped sharply at both the household and individual levels, and the declines will continue for future retirees. We also find that this aggregate change masks a complex relationship between replacement rates and the marital status and income levels of individuals. The decline in replacement rates over time is largest for married couples with husbands having higher earnings. Increases in the labor force activity and earnings of women explain more than one-third of the change. By contrast, the impact of changing marital patterns is relatively small. Changes to the full retirement age and the timing of benefit claiming explain much of the remaining decline.

Keywords: Income, Aging, Elderly, Pension, Social Security, Women

JEL Classification: H550, J160

Suggested Citation

Wu, April Yanyuan and Karamcheva, Nadia S. and Munnell, Alicia and Purcell, Patrick J., How Do Trends in Women's Labor Force Activity and Marriage Patterns Affect Social Security Replacement Rates? (November 15, 2013). Social Security Bulletin, 73(4): 1-24, 2013. Available at SSRN: https://ssrn.com/abstract=2355190

April Yanyuan Wu (Contact Author)

Mathematica Policy Research, Inc. ( email )

P.O. Box 2393
Princeton, NJ 08543-2393
United States

Nadia S. Karamcheva

Urban Institute ( email )

2100 M Street NW
Washington, DC 20037
United States

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States

Alicia Munnell

Boston College - Center for Retirement Research ( email )

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

Patrick J. Purcell

U.S. Social Security Administration ( email )

Washington, DC 20254
United States
202-358-6348 (Phone)

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