Widows, women, and children will be hurt

While women have gained some financial independence in the United States in recent decades, they still earn significantly less than men, have lower savings, and generally poor understanding of personal finance (particularly stock market investments, 401-K, and retirement planning). Women are also more likely to rely on their husbands to take control of retirement planning. However, if the couple gets a divorce prior to retirement or during retirement, women do not have the skills to assume control of their retirement income.

These are some of the reasons the critics of President Bush's plan to privatize Social Security are citing against creation of personal retirement accounts and diverting the savings into high risk investments.

The National Women’s Law Center has released a report that provides an analysis for each of the 50 states and the District of Columbia about the importance of Social Security to women, children and the states and the impact of cuts in Social Security benefits contemplated in the leading privatization plan.

The report shows for each state how many women, men and children receive Social Security benefits; the percentage of elderly women that would be poor without Social Security; how much the benefit cuts under the leading proposal (Plan 2 of the President's Commission) would cut the typical widow's benefit and how that reduced income (including private account proceeds) compares to the poverty line; how much money the state economy would lose if the Plan 2 cuts were in effect, and how that figure compares to overall state expenditures. (Related article: Americans oppose privatization of Social Security if benefits are not guaranteed)

The report highlights the impact of the cuts on widows, a group that is highly vulnerable to poverty in retirement. If the cuts projected by the Congressional Budget Office (CBO) under the leading privatization plan were in effect today, the benefit going to the typical widow would drop well below the poverty line in every state.

“These cuts would devastate widows. Older women, especially widows, rely on Social Security for the vast majority of their income,” said Joan Entmacher, NWLC Vice President for Family Economic Security.

The report, Social Security: Women, Children and the States, shows that nationally the typical widow receives a benefit of $865 per month, but under the leading privatization plan the benefit, including the proceeds of the private account, would be only $476 per month. This amount is equal to only 65% of the poverty line.

Widows in some states would fare even worse. In Arkansas, the benefit would drop from $754 per month to $415 per month, or 58% of poverty. In North Dakota, the benefit would drop from $811 per month to $466 per month, or 62% of poverty. Nationally, 20% of adults rely on Social Security benefits – including 22% of women and 18% of men.

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