Women and Social Security: Are Private Accounts the Answer?

Article excerpt

A study published by the Center on Budget and Policy Priorities, a research and policy analysis institute in Washington, D.C., confirmed what many observers of the Social Security reform debate already believe: Social Security helps to keep one of every three elderly Americans above the poverty line, and women rely more heavily on it than men for retirement income.

This policy group's report corroborates the findings in the AICPA study Understanding Social Security: The Issues and Alternatives (see "AICPA Initiates Debate on Social Security Reform" JofA, Jan. 99, page 11). That study, published at the end of last year, revealed older women were twice as likely as men to live in poverty. It also showed that elderly single women (including widows and divorcees) were the worst off; their poverty rate was more than five times that of married women.

"Clearly, women are the most at-risk group if Social Security runs into trouble," said Judyth A. Swingen, CPA and professor at the College of Business, Florida Gulf Coast University. "Poverty rates for women are double the rates for men," said Swingen, who served as a member of the 1998 AICPA task force on Social Security reform.

With the goal of closing the gap between the sexes, panels of experts discussed the benefits and drawbacks of private Social Security accounts during a recent hearing of the Senate's Special Committee on Aging.

"A critical question in the Social Security debate is how we can improve the income security of current and future American women," said committee chairman, Senator Chuck Grassley (R-Iowa). "I believe individual accounts are part of the solution"

Senator John Breaux (D-Louisiana), also a member of the Special Committee on Aging, said, "Individual accounts will give women, many for the first time, flexibility and access to the equity market to help them retire with financial independence"

Grassley enumerated the ways in which women might benefit from private accounts:

* Individual accounts could provide flexibility and ownership of tangible assets to older women.

* Such accounts could lessen the disparity between families in which both spouses work outside the home and families in which only one spouse works outside the home.

* Individual accounts would allow women who temporarily leave the workforce to continue to increase their account balances through the investment earnings on their accounts. …