For Immediate Release: December 7, 1998

Policymakers at White House Conference Should Be Aware
Of Program’s Paternalistic Design

San Francisco, CA – A new study by the Pacific Research Institute for Public Policy (PRI) shows that today’s social security system retains a paternalistic design that penalizes women of all ages.

"Contrary to what groups like NOW are saying, my research demonstrates that the current retirement insurance program is woefully inadequate to meet the needs of today’s modern woman," says study co-author Naomi Lopez, director of PRI’s Center for Enterprise and Opportunity. "The current system – touted as providing protection against old-age poverty – leaves 41 percent of senior women near or below the poverty level."

According to Ms. Lopez, the current system particularly short-changes:

• Low lifetime earners. Women who work part-time or seasonally, have limited marketable skills, or have lapses between employment due to caring for a child or aging parent, will likely earn less than their male counterparts, leaving them more vulnerable to rely on Social Security as their sole source of retirement income.

• Married women who work. The system awards stay-at-home women with a cash bonanza at the expense of married women who work outside the home. But, in today’s economy, many families need two-person incomes to make ends meet.

• Senior women who work. To subsidize their retirement income, to financially support a spouse or relative, or just to remain active, more and more senior women are working well past the government-imposed retirement age, and thus face severe earnings limitation penalties.

• Widows. Upon entering retirement and after the death of a spouse, women potentially lose up to 50 percent of their initial benefits and more than 88 percent of their pre-retirement income. This throws every fifth widow into poverty.

Statistics indicate, according to the study, that women tend to live longer than men. With longevity comes increased living and health care costs.

"Designed in the 1930s, the Social Security system remains focused on the antiquated model that posits a male breadwinner," says Lopez. "The program essentially sends a ‘stay at home’ message to the nation’s working and senior women. Women deserve better."

To improve this system, Lopez urges policymakers to examine proposals that establish individually-owned personal retirement accounts; allow workers to opt-out of the current Social Security system; provide earnings sharing for women to provide legal ownership over a portion of their spouse’s account; allow individuals that can demonstrate financial security to choose their retirement age; allow seniors to purchase inflation-protected annuities and insurance upon retirement with their accumulated savings; and remove earning limitation rules.

A full copy of the study, "How Social Security Short-Changes Women," is available on-line at http://www.pacificresearch.org/.

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The Pacific Research Institute for Public Policy is a non-profit organization dedicated to the promotion of the principles of individual freedom and personal responsibility. The Institute believes these principles are best encouraged through policies that emphasize a free economy, private initiative, and limited government. By focusing on public policy issues such as health care, welfare, education, and the environment, the Institute strives to foster a better understanding of the principles of a free society among leaders in government, academia, the media, and the business community.