The Treatment of Married Women By the Social Security Retirement Program

It is generally accepted that the Social Security program pays women a higher average ratio of lifetime benefits to lifetime taxes than it does men. Social Security's progressive benefit structure and annuity payment combine with women's lower average earnings and longer average life spans to provide women with more favorable treatment on a lifetime basis. This more favorable treatment does not necessarily imply that women are presented with stronger incentives to participate in the labor force and contribute to Social Security than are men. If anything, Social Security does the opposite. The auxiliary benefit provisions, including spousal and widow's benefits, mean that many women do not receive higher benefits in return for their contributions than they would have received had they never worked or contributed to the program. In this paper, we calculate two measures of treatment by Social Security using the SSA's Modeling Income in the Near Term (MINT) micro-simulation model: the net tax rate, which reflects the net value of Social Security taxes and benefits as a percentage of lifetime earnings; and the generated net tax rate, which represents the net value of benefits received in return for a participant's taxes relative to lifetime earnings. While women pay low and even negative average net taxes to Social Security, their generated net tax rates are higher and often equal the full statutory tax rate. Men, by contrast, pay higher net tax rates but lower generated net tax rates, as their earnings may generate additional benefits for their spouse or survivor. The work incentives presented by Social Security may differ significantly from those implied by measures of overall treatment by the program.

The complete article is available as an Adobe Acrobat PDF here.

Andrew G. Biggs is a resident scholar at AEI.

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About the Author

 

Andrew G.
Biggs
  • Andrew G. Biggs is a resident scholar at the American Enterprise Institute (AEI), where he studies Social Security reform, state and local government pensions, and public sector pay and benefits.

    Before joining AEI, Biggs was the principal deputy commissioner of the Social Security Administration (SSA), where he oversaw SSA’s policy research efforts. In 2005, as an associate director of the White House National Economic Council, he worked on Social Security reform. In 2001, he joined the staff of the President's Commission to Strengthen Social Security. Biggs has been interviewed on radio and television as an expert on retirement issues and on public vs. private sector compensation. He has published widely in academic publications as well as in daily newspapers such as The New York Times, The Wall Street Journal, and The Washington Post. He has also testified before Congress on numerous occasions. In 2013, the Society of Actuaries appointed Biggs co-vice chair of a blue ribbon panel tasked with analyzing the causes of underfunding in public pension plans and how governments can securely fund plans in the future.

    Biggs holds a bachelor’s degree from Queen's University Belfast in Northern Ireland, master’s degrees from Cambridge University and the University of London, and a Ph.D. from the London School of Economics.

  • Phone: 202-862-5841
    Email: andrew.biggs@aei.org
  • Assistant Info

    Name: Kelly Funderburk
    Phone: 202-862-5920
    Email: kelly.funderburk@aei.org

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