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Gender and Race Disparities Impact Social Security

Published on October 2nd, 2019

Women and minorities generally receive smaller monthly benefits from the Social Security retirement, disability and survivors programs. Decades long discrimination in wages paid to women and minorities translates into future decades of lower benefits. In addition, the “deeming” concept in Supplemental Security Income calculations often diminishes, or eliminates, SSI benefits for stay-at-home parents (most often the mother).
The amount of benefits people receive is a complex calculation based in large part upon a worker’s earnings and payments into Social Security. This calculation multiplies the impact of gender and racial pay disparities as the calculations focus on the last 35 years of earnings.

The historical difference in pay rates for women and minorities causes diminished Social Security benefits. Lower wages means lower payments into the system causing smaller Social Security retirement, disability and survivor benefits. Since many people in lower wage jobs do not get pensions, and cannot sufficiently fund 401k programs, their retirement years will be financially challenging.

Further, a parent who chooses to “stay-at-home” to raise children faces significant penalties under the Social Security Act. The years spent raising children and “not working” in the work force means zero payments for years into the system and each of those zero years diminishes future Social Security benefits. This is ironic since our politicians speak so often of the importance of “family values.”

This problem is further exacerbated by the increasing divorce rate. Spousal benefits under the Act are often dependent on a marriage having lasted at least 10 years. With more marriages ending in divorce more people are finding that even spousal benefits are not available to them.

A solution of providing “Caregiving Credits” has been adopted in the United Kingdom, Sweden and Germany but there is little push on that issue in this country.
As more Baby Boomers reach retirement age, and there are fewer workers behind them to continue paying into the system, long term funding of the benefits becomes more challenging. A recent comprehensive proposal called Social Security 2100 Act proposed by Representative John Larson resolves the funding issues – Congress is just beginning the arduous process of tackling this comprehensive solution. One feature of this proposed legislation is increased benefits for all beneficiaries.

It will take many years of pay equity before women and minorities will get equal benefits under the Act. It will take major systemic change, and political courage, to help stay-at-home parents and caregivers who cannot manage competitive employment. Until then careful retirement planning is necessary to make certain that future benefits are maximized.

Social Security disability issues can be confusing and complex. Our in-service presentations explain and simplify this process – just call us to arrange a free training for your professional staff.

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