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Inequity of Social Security Benefits for Women

Written by Kara Stefan

Don't count on Uncle Sam if you want to succeed with your retirement. inequity of social security benefits for women 

In recent years, women have made great strides toward financial independence. About 45 percent of the workforce and more than 40 percent of all wealthy Americans are women. In fact, women earn more than $1 trillion a year and own half of all businesses. What this proves is that women are well equipped with the qualities it takes to manage business and financial matters.

Yet the Social Security system works basically the way it did when it was created in 1939. Back then it worked fine: In most households the man went to work and the woman stayed home and raised the children.

"Although this model of the conventional family is quickly being replaced by the two-earner family, spousal benefits have changed very little since their inception," says Eugene Steuerle, a senior fellow at the Urban Institute in Washington.

Why women fare worse in retirement
They work fewer years (women: 27 years; men 39 years)
They make up 61 percent of all part-time workers
They change jobs more frequently (3.9 years vs. 5.1 years)
They are paid less (76 cents for each dollar a man earns)
They work for companies that don't provide pensions (30 vs. 48 percent)
Pension benefits are lower because of lower earnings
While the system may change, at the moment you need to take steps to ensure your health and well-being during retirement.

Consider this final scenario: You raise two children as a working single parent and Jane and her husband never have any children. Chances are very likely that you'll receive a significantly lower benefit while Jane,who never even paid taxes into the system, retires in relative luxury.

And should you die shortly after your children turn 18, the money you paid out all those years is essentially lost to your family.

One might argue that the intangible rewards of raising children are what help lengthen a woman's life. One thing is for sure: if you choose to take time out of your career or work less-demanding jobs in order to raise your children, do a very good job. You may end up relying on those children to take care of you during your old age.

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Kara Stefan is a Virginia-based writer who specializes in personal finance and consumer investment issues.




 


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