Most people think Social Security operates on a simple principle. While you work, you pay taxes. The more you pay, the fatter the checks you cash once your retire.
But the system is much more complicated. And because of the way Social Security was set up in the 1930s, it doesn't benefit everyone equally. The biggest winners are spouses who stay at home -- for the most part, women. The losers are married couples in which both spouses work, as well as some people who are unmarried or divorced.
Social Security benefits in part reflect how much people have paid into the system through payroll taxes during their careers. Yet among couples who have paid the same amount into the system, those with one earner can draw tens of thousands of dollars more in lifetime benefits, compared to households with two earners.
In other words, married couples with a lone (usually male) breadwinner can put less into Social Security and get more out of it than families with other arrangements.
These costly quirks in the system are putting more and more retirees at a disadvantage. More women have joined the workforce, and fewer are getting married. Rates of divorce have increased as well. In particular, there are far more unmarried and divorced black women, and the result is a racial skew in Social Security benefits.
"The original design was basically based on the stereotype of the man working and the spouse staying at home," said Eugene Steuerle, an economist at the nonpartisan Urban Institute.
"Social Security was meant as a whole-household benefit. That security was intended to extend to your spouse," said David Knapp, an economist at the RAND Corporation. "The world has just changed so dramatically."
Staying at home
When you draw Social Security checks, you receive benefits based on how much you've earned and paid in taxes. There's one major exception: You instead receive half of your spouse's Social Security check if that amount is greater.
By way of example, take a married woman who has never worked, but whose husband earned about $100,000 a year. Even though she hasn't paid into the system at all, she will receive about $15,000 a year in retirement -- half of her husband's check.
Now, take another, similar woman who works a part-time job or returns to the workforce after having kids. She'll pay into the system, giving up part of her paycheck every month in taxes.
Yet there is a good chance that she'll receive the same Social Security benefit as if she not worked at all. That's because she will still receive half of her husband's benefit, the same $15,000 a year, unless she makes enough that her own earnings would entitle her to more. There is a good chance she won't. Social Security benefits are calculated based on workers' average earnings over their entire careers, and for a variety of reasons, women earn less, on average, than men.
In fact, 36 percent of working women born between 1940 and 1943 will receive as much in Social Security benefits as if they not worked at all, according to a study conducted by the Social Security Administration.
Women on the job
Now, consider the effect on an unmarried woman. Let's say she earns $30,000 a year on average. Based on the taxes she pays on her wages, she can expect to draw the same amount annually as the first woman when she retires -- about $15,000.
But suppose she marries a man who makes $70,000 a year. She and her husband together bring in $100,000 a year. That's the same amount as the earlier couple -- and they pay the same amount in taxes.
But here's the rub.
The working woman would still receive the same amount from Social Security as the woman who stays at home. That's because half of her new husband's benefit would be just $13,000, less than she would receive if she were single. She receives the larger amount instead.
For his part, though, the husband earned less and will receive less in retirement than the man in the first example, about $26,000 versus $30,000.
Taken together, the second couple will receive about $41,000 in annual benefits, compared to the first couple's $45,000.
Marriage and race
These days, more people are getting the short end of the bargain. An expanding share of men and women are completely ineligible for Social Security spousal and survivors' payments because they have never married, or because they were married for fewer than 10 years.
That's especially the case among black women. More than a third of black women in late middle age were ineligible by 2009, about twice the share of white and Hispanic women, according to the Social Security Administration.
Some who draw these checks from Social Security would be destitute without them, especially poor, elderly women who could work only a little and save only a little when they were younger. Many would argue the government has to help care for them in their old age.
On the whole, though, the benefits tend to put wealthier couples at an advantage. If the benefits were eliminated, Social Security would distribute proportionally more money to the poor, economists say.
Critics of the benefits say that lawmakers should consider making changes, given Social Security's mediocre long-term finances. If current trends continue, Social Security will no longer be able to pay its beneficiaries in full in about two decades.
"We're paying benefits to people who neither need them or paid for them, and that's a luxury we can't afford right now," said Andrew Biggs, a scholar at the conservative American Enterprise Institute. He called the bonuses for married women "an anachronism from an age when women didn't work outside the home."