By Jane Bryant Quinn
But women, in particular, need to take a hard look at any "reforms" Congress proposes.
On average, women gain relatively more than men from Social Security today. That's because it favors lower earners and dependents, most of whom are women and children. Some of the reforms would erase this advantage.
Workers like to calculate how much more their money might earn if invested in stocks rather than paid in Social Security taxes. But they often forget that their taxes buy other benefits, too.
For example, when workers die, their spouses and young children are eligible for monthly benefits so Social Security provides life insurance.
Retirees who had low or spotty earnings during their working years (usually women), and don't get much personally out of Social Security, can collect a higher benefit through their spouse's account. So there's retirement-income insurance, too.
The program includes divorce insurance. The divorced can collect on an ex-spouse's account if the marriage lasted at least 10 years. So a divorced, single woman isn't abandoned financially in old age.
These payments to a former spouse don't take one penny away from the worker or current spouse. Everyone has a safety net.
It even includes inflation insurance. Your check rises annually with the inflation rate.
These would be costly insurance plans if workers had to buy them from private insurers. Without them, dependents and ex-dependents would be at risk.
Many of the reform proposals would cast off or slash the social insurance plans and use part or all of the Social Security tax for some form of mandatory 401(k).
Money would be diverted from your paycheck into a personal account. You could decide where to invest it. Your standard of living in retirement would depend on how large this nest egg grew.
How would life differ for women under these privatization proposals? Each plan is a little different. But the government's General Accounting Office has provided some broad answers in a study requested by Rep. Barbara B. Kennelly (D-Conn.). Said the GAO:
* Benefit payments: Women on average earn less than men, so less money would go into their investment accounts. Social Security helps low earners by raising their benefits a bit. That wouldn't happen in private accounts. Those accounts might yield more for your money than Social Security does, but the gap between men's and women's retirement income would grow.
* Investment returns: Women tend to be more conservative investors than men. If stocks did poorly for a long period of time, their conservatism would pay. But if stocks did well, their cautious investing would leave them even further behind men's retirement incomes.
* Longevity: Women with the same earnings and investments as men could wind up with lower monthly incomes because they tend to live longer. They would have to draw less from their accounts to be sure the money lasted a lifetime.
In the Social Security program, people who had equal incomes get equal monthly benefits for life.
You also could get equal payments from a private plan. The government might decree that, if you bought a lifetime annuity, you would be charged a unisex rate obtained by averaging male and female life spans.
But men wouldn't like that. Their incomes would be lower than if they paid the "male" rate.
* Divorce: None of the plans provide monthly payments to an ex-spouse. My crystal ball sees more impoverished divorcees.
Some reformers would split the investment account at divorce. That helps the unemployed spouse at the worker's expense but has no guarantee that spouse will get the same income that Social Security now pays.
* Spouse protection: When a worker dies today, a spouse can get 100 percent of the worker's monthly Social Security benefit for life.
With private savings, the retired worker can take money as needed, in a lump sum or as a lifetime annuity. So spouses get no income guarantees.
A private investment account might give a spouse more than Social Security pays. It also might give less. That depends on life's tragedies, how the money is invested and how the stock market behaves.
We all need private savings. But dependents, in particular, also need a Social Security guarantee.
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