Equity for divorced aged women: Social Security and poverty.

Abstract

Dramatic increases in the numbers and proportions of aged divorced women are about to occur. To date, however, there has been little research on aged divorced women. Historical research suggests that three key social institutions, the family, the workplace, and the state, have systematically disadvantaged women in the United States. While the divorce rate and women's workforce participation both increased during the last fifty years, women's wages and responsibilities at home have changed much less. Our society depends on women to raise the children and care for the family, important but unpaid work. Women and men seem to prefer that women do this work, and the state has facilitated this arrangement. This study examines the economic status of divorced women and other subgroups of new Social Security beneficiaries in 1982. Divorced women had lower assets and income than other groups of women by marital status except for separated women. Because Social Security is the primary source of income for the average aged American, this research simulates three alternative forms of Social Security benefit structures. OASDI benefits are reported at 100% of the Pia. Earnings sharing distributes benefits more towards divorced women, married women, widows and widowers while reducing benefits of divorced men and married men. A large increase in benefits would occur among poor divorced women and widows under the shared earnings simulation. The second simulation is of a new benefit formula to make Social Security more redistributive. Under this simulation the benefits of no respondents would be lowered. This simulation suggested that the new formula would be effective in reducing poverty, but under the new formula, the Social Security benefits for men would greatly exceed the benefits for women. The third simulation compares two forms of a two-tier proposal. The two-tier proposal that combined earnings sharing with a poverty guarantee proved to be the most equitable arrangement. It would be less costly than either the current plan with or without a poverty guarantee or the new benefit formula with or without a poverty guarantee.