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Is Social Security Fair to Women?
Q: In a recent column explaining why most women usually get less from Social Security than men do, you said that Social Security rules are gender neutral and fair. You went on to say that society hasn't been fair, pointing out that women earn less money than men do and take time off from their careers to raise families. Thus they qualify for smaller Social Security benefits. But I think you are wrong. I think Social Security laws are unfair. Something needs to be done so that women get Social Security credit for the time they spend as mothers and homemakers. Then Social Security really would be fair!
A: This is a topic that's been discussed many times over the years. The biggest problem with your proposal is how earnings (that don't really exist) would be credited to a mother's or homemaker's Social Security account.
When people work for wages, their employer withholds the Social Security payroll tax from their salary, matches that amount with an equal payment, and sends that money to the government along with a report of each employee's Social Security number and earnings.
If you are self employed and have a net profit, you pay a percentage of that amount in Social Security taxes when you file your annual tax return — and that net profit and tax payment are recorded in Social Security files.
But mothers and homemakers are not paid, at least not in the conventional sense. So how would any income and tax payments get logged into Social Security records?
Some people have suggested that the government should simply assign a certain specified amount of deemed income to a mother/homemaker's Social Security account. The problem with that scenario is the cost. Who is going to pay for the billions of dollars in extra Social Security benefits that would be generated by those fictitious deemed earnings credits?
Another more commonly mentioned proposal that's been bandied about for years is even more controversial. It is usually called earnings sharing. It involves dividing the earnings a couple makes equally between a husband and wife — at least for Social Security purposes.
So for example, if husband Hank makes $100,000 per year and wife Wendy is a stay-at-home mom with no outside income, then $50,000 would be credited to Hank's Social Security record and the other $50,000 would go on Wendy's account.
Or if husband Hugh makes $80,000 per year and wife Wilma works outside the home and makes $40,000 annually (a total of $120,000 in family income), then $60,000 would be credited to Hugh's Social Security number and the other $60,000 to Wilma.
That would be good news for Wendy and Wilma.
Some people might be inclined to say that's OK because the extra Social Security benefits paid to the wives will make up for the retirement benefits lost by the husbands. But that's actually not how things would usually pan out.
To explain, we'll follow Hank and Wendy's story. Let's say Hank's salary, assigned only to his Social Security account, leads to a Social Security benefit of $2,000 per month. But if their earnings were split between them, then both Hank and Wendy would end up with $1,000 each in monthly retirement benefits. So far, so good. They still end up with a total of $2,000 per month.
BUT, (and you'll notice it's a big BUT), under the current rules — in other words, without earnings sharing — Hank would get his $2,000 monthly retirement benefit and Wendy would qualify for $1,000 in monthly dependent wife's benefits.
That means under the current (and some would say unfair) rules, Hank and Wendy end up with $3,000 in monthly Social Security benefits. But under the proposed (and some would say fair) earnings sharing rules, Hank and Wendy would end up with $2,000 per month.
And then there is another point Wendy would have to think about. Chances are pretty good that Hank is going to die before she does. (Talk about life not being fair!) Under the current rules, Wendy would get $2,000 per month in widow's benefits when Hank dies. But under the earnings sharing plan (again, that's where Hank and Wendy are each getting $1,000 in their own retirement benefits), Wendy will get no widow's benefits — because her own retirement benefit offsets any widow's payment she would be due.
And then of course, there is also the matter of divorce. Chances are 50-50 that Hank and Wendy, or Hugh and Wilma, are going to split someday. And each of them is likely to remarry. So how do we handle all these earnings that are shared between all these members of all these various couplings? Oh what a tangled web we weave when first we try so hard to be fair!
For these and other reasons, the earnings sharing proposals have never even come close to being enacted into law.
If you have a Social Security question, Tom Margenau has the answer. Contact him at email@example.com. To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
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