Virtually all women would be better off under a privatized Social Security system in which they get individual accounts, a study released by the Cato Institute today says. Reform proposals that would privatize the system, with a contribution rate of 10%, would give all women more than twice the retirement benefits they are currently eligible for, the Cato study noted.
That's because the current Social Security system's benefit rules place married women at an inherent disadvantage, according to the study by Darcy Ann Olsen, entitlements policy analyst. The system's dual-entitlement rule frequently results in a working woman's receiving benefits based only on her husband's earnings, ignoring the payroll taxes she has paid.
The rule often means a two-income family gets lower benefits than a single-income family with the same earnings. Moreover, the system's survivor benefit rules can leave widows with only half the income the couple received when the husband was alive.
