Earnings sharing in the U.S. Social Security system: a microsimulation analysis of future female retirees.
OBJECTIVE
As part of an ongoing effort to analyze the distributional implications of potential policy reforms to the U.S. Social Security system, we consider the widely discussed reform of earnings sharing. Such an approach has been viewed as a way to "update" Social Security's family benefits based on marital status and as a means to make the system more marriage neutral.


METHODS
We use the Social Security Administration's Modeling Income in the Near Term model to simulate the distributional effects of two earnings sharing alternatives, a basic option and a modified inheritance option, on the projected retiree population in 2030. We focus our analysis on uncovering how different subgroups of women would be affected under the alternative system.


RESULTS
Widows and surviving divorced women, particularly those in lower socioeconomic groups, would face some of the steepest benefit decreases. Adding an inheritance provision would mitigate reductions across the board; however, it may not provide as much benefit adequacy to widows as might be expected.


CONCLUSIONS
Certain groups of women would fare far better under the current Social Security system than under earnings sharing. Linking benefits with earnings sharing would be particularly problematic for lower income widows and single-earner married couples. Never-married persons are unaffected.
Iams
Howard M
HM
Office of Research, Evaluation, and Statistics, U.S. Social Security Administration, Washington, DC 20254-001, USA. Howard.M.Iams@ssa.gov
Reznik
Gayle L
GL
Tamborini
Christopher R
CR
D000368:Aged; D000369:Aged, 80 and over; D005260:Female; D006801:Humans; D008297:Male; D017533:Marital Status; D008875:Middle Aged; D012179:Retirement / Q000191:economics*; D012737:Sex Factors; D012943:Social Security / Q000191:economics / Q000458:organization & administration*; D014481:United States; D017805:Widowhood / Q000191:economics