Report Says Private Investment Is Better Than Social Security For Most Women
By Rita Jupe/CNN
WASHINGTON (CNN) -- Most retired women in the United States would be
better off under a system of individually-owned private investment accounts
than under the current Social Security system, according to a report released
Researchers said nearly all women -- whether they are stay-at-home moms or
corporate executives across the range of incomes -- would receive a greater
income in retirement if they opted for 401K-style private investment plans.
The report, titled "Benefits of Social Security Privatization for
Women," was done by the Cato Institute, a conservative, free-market oriented
Washington think tank.
The study concludes the "dual entitlement" rule of Social Security means
women who have worked all their lives and paid payroll taxes often receive less
Social Security benefit in retirement than women who have worked less or not at
all. This is because dual entitlement prevents a women from collecting her own
retirement and spousal benefit if her husband's income is greater, according to
A fully privatized Social Security system, which would still have safety
nets for the most poor, would give women the ability to make their own
The Cato Institute study found that women who retired in 1981 would
receive from $100 to $1,500 a month more under a fully privatized plan than
under Social Security, said Darcy Olsen, the report's author.
The researchers compared benefits for women under Social Security, under a
partially privatized "double-decker" system and under a fully privatized plan
in which couples share their incomes from the beginning of the marriage.
They looked at a group of women who retired in 1981 and formed a second
group of women by projecting the likely earnings of women across the range of
The study found that only 3 percent of the women in the 1981 group would have received lower benefits in a privatized system than the current Social Security system.
Low-income women, who are not accustomed to investing in private capital
markets, would not be disadvantaged by a private system, Olsen said.
A larger private pension market would offer prospective female investors more information about investing. Such advice is already available in seminars at
libraries, she added.