Susan Feiner

(WOMENSENEWS)–Planning for retirement is about security and safety.

Financial markets, as the current headlines remind us, are about risk and volatility. The two do not mix. Just ask your neighbor whose sub-prime mortgage is about to re-set, or who just lost her home in a foreclosure or who is watching her 401 (k) market-linked retirement account shrink by the day and hour.

For all these reasons, women should turn to politicians and policies designed to shore up Social Security.

Why Women Depend on Social Security


  • Fully 59 percent of women have no employer-sponsored pension benefits, according to 2006 U.S. Census Bureau figures.

  • Many employers have long "vesting periods" before workers actually own their retirement accounts with the result that women’s higher turnover rates hurt them.

  • More than half of all women are pushed into part-time work because of the lack of affordable care for children, the sick or the elderly. Part-timers rarely get retirement benefits.

  • More often than men, women work in small enterprises where retirement benefits are rare.

  • Because sex discrimination and job segregation keep women’s earnings at around 76 percent of men’s, women’s lower earnings and savings mean their retirement funds grow more slowly.

  • At 65 the typical woman is likely to live 10 years longer than the typical man, which means that more often for women than men Social Security is the only benefit we can rely on for our entire life spans.

Raising Earnings Cap

Because some funding increase is needed to cover payouts to retirees beginning around 2041, Democratic presidential hopeful Sen. Barack Obama recommends increasing the level of earnings subject to the social-security tax.

Currently only the first $97,500 of wage and salary income is taxed.

That tax cap is in itself a strong bias against women, who are more likely to pay taxes on 100 percent of their earnings since we earn, on average, less than men and therefore are less likely to exceed the tax cap.

In the past union bargaining pushed employers to offer most employees defined benefits plans and 20 years ago almost half of all full-time workers had them.

Defined benefits plans–the ones that CEOs craft for themselves–are far superior to defined contribution plans. In the former both employers and employees pay into the pension, then at retirement the retiree receives a set or "defined" amount each month, which is often indexed to inflation. In the Democratic primaries only former Sen. John Edwards argued that employers be held to their defined benefits obligations.

Defined contribution plans, by contrast, do not guarantee any particular monthly payment at retirement. Instead, a set "defined" amount is paid in each month. Employers need not contribute anything. The pay-out varies depending on the investments you’ve made, your salary, how long you’ve worked and the vicissitudes of the stock market.

Employers Can Afford It

Employers can certainly afford defined contribution plans. Since the late 1970s inflation-adjusted wages have been stagnant while worker productivity has nearly doubled. Many once-secure white-collar jobs now exhibit the characteristics of sweatshops: The pace is relentless, employer demands on workers’ time are rising and employer contributions to pensions are a quaint memory. Obscene increases in CEO pay and corporate profits are the result.

These working conditions make the need for Social Security stronger now than at any time since World War II.

Despite fears that have been peddled to the contrary, the sky is not falling on Social Security. In fact it’s financially healthier today than it has been for most of its 69 years; something that can not be said about the financial markets right now.

The Social Security trustees and the Congressional Budget Office provide the most reliable data. The trustees say all current and future retirees will receive full benefits–including increases associated with the rising cost of living–through 2041.

The Congressional Budget Office estimates Social Security is fine through 2046.

In both cases minor changes–such as those made by past presidents, including Ronald Reagan–will build the trust fund balances needed to fully fund U.S. retirees well into the next century.

This is particularly important for women since Social Security’s guaranteed benefits remain our most important source of retirement income. Yes, plenty of women have money exposed to the vagaries of the financial markets. But when Women’s eNews called Vanguard, the major investment-management company based in Valley Forge, Penn., we learned that about 40 percent of the company’s defined-contribution plans are held by women, 60 percent by women. The median value of female-owned accounts as of Dec. 31, 2007 was about $20,000 versus $32,000 for men.

Median annual incomes in 2000 for men and women 65 and older

  Women Men Gap Gap as
a %
Social Security $7,750 $11,040 $3,290 30%
Assets $1,330 $1,650 $320 19%
Pensions $5,600 $10,340 $4740 46%
Earnings $8,450 $14,780 $6330 43%
Total Retirement Income $23,130 $37,812 $14,682 39%
Social Security as a % of Total 34% 29%    

Source: Institute for Women’s Policy Research.

If you cannot read this table click here

There were over $2 trillion in assets in the Social Security Trust Fund at the end of fiscal 2006. Wall Street money managers–and the politicians aligned with them–have been salivating at the prospect of plundering these public assets. But women, particularly in light of today’s rocky markets, should look at the reasons why Social Security is necessary to our economic future.

Women should rally against any gambits to turn our economic well-being over to the most reckless gamblers in the world.

Susan Feiner is director of women and gender studies and professor of economics at the University of Southern Maine. Watch for her new blog featuring clear answers to your questions about the economy.

For more information:

Institute for Women’s Policy brief on Social Security

Center for Responsible Lending, Tool to see how the sub-prime crisis will affect your neighborhood

Stuart Elliot’s clear, detailed discussion of Social Security

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