In his State of the Union speech, President Clinton restated his commitment to saving Social Security, and invoked poverty among elderly women as a compelling reason to ensure retirement security. He’s right about that, but his milquetoast approach to reform won’t help women, and may end up making things worse.

The media and some leading feminist groups defend the Social Security system and misrepresent proposals for individual retirement plans as discriminatory towards women. But in "How Social Security Short-Changes Women," the Pacific Research Institute’s Naomi Lopez and Dominique M. Lazanski point out that the existing system treats women unfairly.

Contrary to conventional wisdom, the Social Security system is not a gender-neutral program. As the authors point out, the system rewards stay-at-home women while penalizing married women who work outside the home.

Under current guidelines, a married woman who does not work outside the home is automatically entitled to her own retirement benefit equal to half of her husband’s retirement benefit. Upon his death, she then receives a benefit equal to 100 percent of his retirement benefit. Yet a married woman who worked outside the home is penalized by the system. She will only receive the greater of either her own cash benefit or her spousal benefit, but not both. As a result, two families with the same household income may receive startlingly different retirement benefits.

Today a significant majority of women participates in the labor force. Yet the existing system was created under the assumption that the majority of women would not work outside the home. In fact, the current system actually depends on women’s payroll taxes to support its hemorrhaging funds.

Not only does the current system favor some women over others – its date with bankruptcy will disproportionately affect women, as well. Women tend to live longer then men, and are more dependent on Social Security. Therefore, they have the most to lose when the present system implodes, as it is set to do in the not-too-distant future.

As Lopez and Lazanski write, "Forty percent of elderly women who receive Social Security are at or near poverty. This situation is only likely to worsen if lawmakers rely on the same band-aid approaches to the program’s looming insolvency, such as increasing payroll taxes or reducing benefits."

Remember the old saying about teaching a man to fish rather than giving him handouts. If we continue to leave retirement security in the hands of the government, we leave seniors, and women in particular, at the mercy of a rather unsuccessful financial manager. On the other hand, if we could let people keep their own money, they would have a vested interest in making it work and grow for them.

The evidence already shows that privately-owned, individual retirement accounts wouldn’t just help women with MBAs. Recent research from the Cato Institute finds that even among low-income women with interrupted work histories, a privatized retirement system leaves them significantly better off.

Despite his ongoing troubles, President Clinton gets a lot of credit for protecting women’s rights in the public policy arena. With Social Security reform, both he and the Congress have an opportunity to make a historic difference for American women and our futures – but only if they are prepared to give up the band-aids and perform radical surgery.

— Katherine Post

PRI Senior Fellow,

Women's Studies