Social Security on the Rocks: What’s at Stake for Younger Women

By Jennifer Clark

For many young working women, retirement security rests at the bottom of a lengthy priority list loaded with seemingly more pressing concerns. These include finding a satisfying, well-paying job, negotiating a raise and, for many, juggling family responsibilities with career advancement. Social Security, a government program associated with older Americans, might seem even more abstract to demographic whose retirement years are quite a few decades away. But as a panel of experts explained to an engaged crowd of young professional women recently, women face unique challenges in retirement and, for women of all ages, the future of Social Security is a shared concern.

The panel—hosted by the Women’s Information Network (WIN), a professional network of women in Washington, DC—featured young women experts and advocates who debunked common myths about Social Security and pointed out sobering facts about the program’s critical role in ensuring economic security in retirement. (View IWPR’s Flickr to see photos from the event)

Ensuring Your Retirement Security Starts Now

Lara Hinz of the Women’s Institute for a Secure Retirement (WISER) started with an overview of the unique challenges women face in retirement. Women live longer, earn less, and have less in savings or pensions. In addition, women are more likely to spend time out of the workforce, work in part-time jobs, and live alone in retirement, all of which increase women’s  risk of poverty in old age. Then Hinz delivered a wake-up call to the room of young working women: even women who live comfortably in their working years may be poor in retirement. Social Security then plays a vital role in retirement security for women. One in four unmarried women in retirement receive all of their income from Social Security benefits and, without access to Social Security, 58 percent of women over the age of 75 would be living below the poverty line.

Social Security is Your Insurance Plan for Retirement

With 90 percent of women making less than $55,000 per year, nonexistent savings is a real risk to retirement security. Social Security, as Kathryn Edwards from the Economic Policy Institute noted, helps mitigate the risks associated with income insecurity in retirement. But what exactly is Social Security? “Saying that Social Security is money older Americans receive from the government is like saying the Pentagon is the largest office building in the world. It’s not wrong, it’s just not the full picture,” explained Edwards, who is writing  a forthcoming EPI textbook for young Americans on Social Security. Social Security is an insurance program, which helps protect workers and their families from the risks—old age, disability, or death—associated with not being able to work.

For young Americans, Social Security is not just money that older Americans receive from the government, Edwards stressed, “this is your insurance that you are already paying into.”

Especially Vital to Women of Color

While women in general face unique challenges in retirement, Youngmin Yi from the Institute for Women’s Policy Research discussed how women of color face challenges that are particularly intense, making Social Security even more important to this demographic. Black women in particular experience higher rates of disability and are more likely than other women to live alone in old age. Seventeen percent of black women between the ages of 65 and 74 are currently living in poverty; without Social Security, 50 percent of black women in this age range would be living in poverty. Latinas also face more pronounced challenges in retirement, as they are more likely to work in low-wage jobs without pensions and are most likely to live longer than other groups of women. Social Security is the most common source of income for older Latinas, further underscoring the critical value of Social Security.

Countering Political Rhetoric with Informed Voters

If Social Security is a vital and efficient, insurance program, then why is it in crisis? Well, it’s not. It’s actually running a surplus—a big one—at $2.6 trillion. Melissa Byrne from the Strengthen Social Security Campaign pointed to current policy proposals that could potentially threaten Social Security’s long-term solvency and to how young women can join the effort to defend the program from future cuts. Far from strengthening Social Security, Byrne noted, efforts at means testing the program—reducing or eliminating benefits for those defined as “affluent”— would undermine Social Security as a universal insurance program, turning the system into a government welfare program. To many people, regardless of political leanings, raising the retirement age seems like a reasonable compromise to ensure Social Security’s long-term solvency. However, raising the full retirement age to 69 is a 13 percent benefit cut, a fact which rarely shows up in talking points (except these).

To ensure that these ideas do not become policy, Byrne suggested that young women stay informed, and most importantly, vote.

Resources for Staying Informed

Jennifer Clark is the Development Coordinator at the Institute for Women’s Policy Research.

Social Security: A Lifeline for Latinas

by Mallory Mpare

With talks about the national debt and deficit dominating policy discussions, much attention has been paid to the fabled contributions Social Security makes to the national debt.  As has been said before (but clearly bears repeating), Social Security does not contribute to the national deficit. In fact, poll after poll shows that the American people understand that Social Security does not contribute to the deficit.  Yet it seems that with Social Security still on the table for cuts, this message is not getting through to those who need to hear it most.

How can we make this message resonate? It is important to discuss policy and its wider implications for the economy at large, but we cannot forget that policy is always tied to people. Instead of focusing on the dollars and cents of Social Security maybe we should talk about how changes to the program affect individuals. After all, how long can political leaders continue to ignore the needs of their constituents?

Social Security was created to ensure that the elderly could retire from the workforce in dignity, without fear that after a lifetime of work they might spend their old age in poverty. Today, Social Security is a crucial source of income for many Americans.  An IWPR report details how, even in the midst of efforts to scale back benefits, people are becoming increasingly reliant on Social Security as a source of income. Though men’s reliance has increased more than women’s, the degree ofreliance is greater for women and people of color who tend to have fewer alternative sources of income.

To supplement its report, IWPR released a fact sheet which details the importance of Social Security to Latinas in the United States. Yes, Social Security is designed to redistribute income to low earners and yes, it currently has policies that disproportionately benefit women.

However, it is impossible to fully compensate for a lifetime of gender inequality in wages.

Compound this with labor market discrimination based on race and ethnicity and many Latinas are bound to encounter economic insecurity in old age.  Additionally, Latinas have a higher life expectancy—89 years compared with 85 years for women of all races and ethnicities combined—and tend to be concentrated in low-wage jobs without pensions.

Latinas in the United States account for at least 1.7 million of the total 52.5 million Social Security beneficiaries. After age 64, few Latinas receive income from sources other than Social Security. In fact, only 27 percent of Latinas aged 64–74 report any income from assets and this source of income becomes even scarcer with age (only 21 percent of  those 75 years of age and older report having any income from assets). Yet asset income is the most common source of additional income for older Latinas, after Social Security.

Although many older Latinas rely on Social Security, the benefits they receive from the program are relatively modest. Among Americans aged 75 and older, women as a whole receive average annual benefits of $11,585.  But Latinas of the same age range receive on average just $8,975 in Social Security benefits.  Still, these modest benefits constitute by far the largest share of income for older Latinas. Eighty percent of Latinas aged 75 and older rely on Social Security for at least half of their income and more than half rely on Social Security for all their income.

In other words, for older Latinas, Social Security is not merely a safety net; it’s a lifeline.

Mallory Mpare is the Communications Manager at the Institute for Women’s Policy Research.

Social Security for us 20 and 30 somethings

A Woman Running

My grandfather jokes that he makes more now off of Social Security than he did when he was working. He will turn 90 this year, and I am turning 30. I remember reading about the need for Social Security reform when I was in high school and even wrote an article for my school’s papers. The bottom line: many experts were saying back then and still are that Social Security will not be available for us when we are ready to retire, or will be greatly reduced.
What does that mean for me? Well, I started a 401K plan at my first job out of college as soon as I became eligible. Now, seven years later, I have approximately $29K saved in my IRAs. The problem for others in my age group? They are delaying starting a personal savings plan, which can be a costly mistake for their future.
I don’t understand everything there is to know about investments, but I do know this: You need to start saving early and the longer you keep saving, the more money you’ll make over the long term. Maybe Social Security will be there for us (at least if IWPR where I work now, has anything to say about it) but Social Security was never meant to be a complete retirement package—it’s supposed to be combined with employer pensions and personal savings.
It’s not always easy financially to take out that extra $20 or $50 a paycheck, but I’m hoping down the line it will pay off for me with a secure (perhaps early?) retirement. I feel proud looking at my account to see what I’ve accomplished so far at my young age.
This also points out the need for reform, and for us 20-30 somethings to ask for change in the system. Yes we know we can’t rely solely on SS for retirement, but we have paid into the system with our payroll taxes, so we deserve and are entitled to fair benefits based on our contributions.
- Michelle Schafer