Securing the Future for Women

When you go to the supermarket, or attend religious services, look closely at the faces of older women, Hillary Clinton was saying.

“Every other woman you see who is over 65 would be living in poverty” without the economic lifeline provided by Social Security, the first lady told audiences watching from Los Angeles and nine other cities Saturday in a special teleconference on women and Social Security.

Benefits are far from lavish--women get an average of $676 a month from Social Security--but the checks are a shield against destitution. The poverty rate among women over 65 is about 14%. Take away Social Security and another 39% of this group would fall below the poverty line.

The future of the biggest of all government programs becomes a vital issue for all Americans of retirement age but is particularly pressing for women. They tend to earn less than men, are less likely to get a pension, and when they do get one it tends to be smaller because they generally have taken more years out of the work force to care for children or older relatives.

Only 26% of women over 65 receive a pension, compared to 46% of men. And their pensions are an average of $6,684 a year, compared to $11,460 for men, according to the Employee Benefit Research Institute.

“The face of America is changing. She is growing older,” according to Terrie Wetle, deputy director of the National Institute on Aging. Women typically outlive their husbands, and then their savings.

But, fortunately, nobody outlives a Social Security check, with its automatic adjustment each year to protect against inflation. In fact, the first person who ever received a Social Security check--Ida May Fuller of Vermont--began drawing benefits in 1940, and when she died 35 years later, at 100, she had collected $22,888. It was a great deal for her--she had paid a total of $24.75 in payroll taxes from 1937 through 1939.

But future generations won’t enjoy that kind of financial windfall. Instead, they face the problem of a maturing system with fewer workers to carry the financial burden of paying for retirees.

Boomers’ Retirement Presents a Problem

Social Security is a pay-as-you-go system. Today’s workers (147 million) pay taxes to support current beneficiaries (44 million). When the baby boomers retire, they will depend on their children to pay the taxes to keep the Social Security checks flowing. But the boomers married later and had fewer children than earlier generations--meaning there will be comparatively fewer workers to pay taxes to finance the boomers’ retirement.

Bill Clinton, the first baby-boomer president, is trying to figure out a way to keep the system going for his generation, the horde of Americans born between 1946 and 1964. In just 12 years, the leading edge of the boomers will be eligible for full retirement benefits. (These “old boomers,” who are at least 50, include Bill and Hillary Clinton, Al and Tipper Gore, Cher, Susan Sarandon, Donald Trump, Farrah Fawcett, Kareem Abdul-Jabbar, Ozzy Osbourne, Cheryl Tiegs, Donna Karan and Donna Summer.)

The big debate deals with keeping Social Security solvent so baby boomers can get their checks. The crisis year is 2032, when Social Security will have consumed its surplus, and payroll taxes will be sufficient to pay only 75% of benefits promised under current law.

Neither Clinton nor members of Congress, Democrats and Republicans alike, have any enthusiasm for closing that 25% funding gap with higher taxes, reduced benefits or by raising the retirement age.

Instead, the president’s plan calls for reserving 62% of anticipated future budget surpluses--some $2.7 trillion over 15 years--to help Social Security. It’s an indirect approach: The surpluses will be used to reduce the national debt. Like a consumer with an overactive credit card, the country is spending huge sums of money just to pay interest on its debt. As the debt is reduced, it will be easier to find the funds to finance the growing burden of Social Security benefits.

Republicans say the president is just delaying the day of reckoning. Many of them want to let workers keep a portion of their Social Security payroll taxes (12.4% on salary up to $72,500, equally divided between worker and employer) for investment in personal stock accounts. This would enable Americans to build nest eggs and to depend less on Social Security.

“Younger employees should have the chance to increase the quality of their life” through individual accounts, Rep. Jennifer Dunn (R-Wash.) said at the Saturday conference, where she was co-chair along with Hillary Clinton.

“We have a tremendous opportunity to allow workers to build up some wealth of their own for the first time,” said Leanne Abdnor, director of the Alliance for Retirement Security, created by the National Assn. of Manufacturers to press for individual accounts.

But the accounts could be risky for women, according to some critics. Social Security now is a family benefit with protections especially significant for women. At retirement, a woman can choose between a benefit based on her earnings or an amount equal to 50% of her husband’s benefit, whichever is larger. For two-thirds of women, the spousal benefit is a better deal.

(A woman who was married for at least 10 years has the right to a sum equal to 50% of her ex-husband’s retirement check. This is true no matter how many wives he had. The marriage may have lasted no more than 10 years, but the benefit goes on forever.)

Individual accounts, however, would be personal, private property. Will a woman “have access to the private account of her husband, or will he leave it to his girlfriend when he dies?” asked Heidi Hartmann, president of the Institute for Women’s Policy Research, another speaker at the conference.

Devising Ways to Boost Benefit for Older Widows

In addition to debating the merits of personal accounts and arguing the best way to assure Social Security’s solvency, President Clinton and Congress have an opportunity this year to place long-ignored women’s issues on the agenda of reform.

“As much as Social Security does for poor women, it doesn’t do enough,” said Hartmann. And the oldest women are the poorest. “Elderly women who are widowed have very few resources,” Jane Ross, deputy commissioner for policy at the Social Security Administration, told the conference, called “What Every Woman Should Know About Social Security.” It was sponsored by Americans Discuss Social Security, a project of the Pew Charitable Trusts.

Couples may be relatively prosperous at age 65. But by age 80, the husband has died and the wife is existing on a comparatively meager income.

Take the imaginary Jane and John Doe. They retire, John receives a Social Security benefit of $1,000 a month, and Jane gets $500 (the spousal 50% share). When he dies, she foregoes the spousal benefit and receives an amount equal to his full benefit--$1,000. Several ideas are floating around to put more cash in Jane’s pocketbook:

* The survivor’s benefit could be boosted to guarantee Jane 75% of the total family income while John was alive--$1,500--or $1,125 a month.

* Congress could authorize a special boost in benefits at age 80 or 85, a stage of life when women far outnumber men.

* The system could be revamped to give Jane some earning credits for the years she was out of the work force when her children were young, or when she quit her job to help her mother through a serious illness. Currently, Social Security benefits are pegged to 35 years of earnings, and many women have a number of “zero” years when they did not work outside the home.

Specific measures to help elderly women have never received serious attention in committees of Congress. They could have a fighting chance this year to be included as part of a Social Security deal between President Clinton and Congress.

“There is even more we can do, there are inequities that can be fixed,” Hillary Clinton reminded the viewers at Saturday’s teleconference. The Democratic first lady was echoed by Republican Dunn, only the fifth woman in U.S. history to serve on the House Ways and Means Committee, which writes Social Security laws. “Don’t forget the women,” Dunn said.