Required

Women and Social Security Benefits in a Two-Income Household

The structure of the Social Security benefit designed for women has not kept up with their changing socio-economic status.

In an unexpected twist, because of how Social Security was designed and when, the people who are most at risk for coming up short on benefits, are women in a two-income household, says Benefits Pro in a recent article “How Social Security rules harm the two-earner household.”

It doesn’t seem right, but this counter-intuitive fact is the conclusion of a brief from the Center for Retirement Research, the highly respected center at Boston College. They examined how women’s changing marital history affects retirement income. The conclusion is a surprising one.

As women’s marital and work status have changed over the years, with women spending more time as single than in the past, they will spent about half their adult lives married. Therefore, the sources of funds they would have otherwise counted on have shrunk.

To keep it in perspective, most households in general are not prepared for retirement. The National Retirement Risk Index shows that 50 percent of all American households are at risk of falling short in retirement, the report said, even if they work to age 65 and annuitized all of their financial assets.

Social Security has not kept up with the changes of more women opting to be single and working outside of the home. Women continue to face a higher risk of running out of money during retirement, in part due to lower earnings, less time in the workplace and often working part-time while raising children, rather than full-time. However, women in a two-income household face more of a risk. Here’s why.

Social Security provides a benefit equal to 50 percent of the worker’s benefit. If a second spouse is working, the spousal benefit drops gradually, and disappears completely when the second spouse’s worker’s benefit matches or exceeds the level of the spousal benefit. This means that the average two-income couple has a Social Security replacement rate that is not only lower than the one-income household, but also significantly below the rate for single women.

Another problem for two income households: often only one of the two workers is eligible for an employee-benefit retirement plan. Instead of saving for two, that spouse is likely to save for a single participant. That’s half of what the couple will need.

Another handicap for women’s retirement is the financial scars left by divorce. Nearly a third of all women in a couple have been married before, and this boosts retirement risks by as much as 10 percent.

So not only do two-income households need to save more for retirement, Social Security needs to maintain its currently scheduled benefits for single women.

Reference: Benefits Pro (July 22, 2019) “How Social Security rules harm the two-earner household”

Hear From Our Clients
tes-prev
tes-next

I heard Cindy’s presentation at a Senior Luncheon at my church, and was very impressed. She helped my daughter and me understand many aspects of elder law. Josh has also been very helpful in my planning to enter an independent living situation . I have told many friends about them.

- Charlotte

The very best elder law attorney and staff anyone could ever ask for! I have referred a number of clients to Cindy and she never disappoints. She is kind, caring, and extremely thorough in making sure everything is completed as it should be. I highly recommend Cindy for anyone needing lawyer services; she truly goes above and beyond for every client she helps and has had a huge impact in so many peoples’ lives. Thank you, Cindy and staff, for everything that you do- I’m so glad to know you!

- Kerri

Cindy and the Nelson Elder Care Law team are trustworthy and helpful. They are the experts in elder care law. At Leaf Cremation, we entrust our families to the care of the Nelson team when their services are needed.

- Pierce

Josh Nelson, and his staff, have been amazingly helpful to our family. The ins and outs of nursing homes, the rules and regulations that govern Medicare and Medicaid are daunting and the folks at Nelson Elder Care Law have been informative, responsive, and above all, empathetic. I cannot emphasize enough how their service has taken a weight off of our shoulders especially during a world pandemic that has targeted nursing homes across our country. I highly recommend retaining Josh and his firm!

- Marcia

I had a simple legal question to them that I needed answered and they very helpful in giving me the information I needed. I highly recommend them and will reach out to them if I need more advice or assistance. Thank you for taking your time to just answer a couple of questions I had!

- Ben