{"id":5247,"date":"2016-08-29T08:10:53","date_gmt":"2016-08-29T14:10:53","guid":{"rendered":"http:\/\/admin.patheos.com\/blogs\/janetheactuary\/?p=5247"},"modified":"2016-08-29T08:12:53","modified_gmt":"2016-08-29T14:12:53","slug":"a-different-viewpoint-on-survivors-benefits","status":"publish","type":"post","link":"https:\/\/www.patheos.com\/blogs\/janetheactuary\/2016\/08\/a-different-viewpoint-on-survivors-benefits.html","title":{"rendered":"A different viewpoint on survivor’s benefits"},"content":{"rendered":"\n<\/head>

\"https:\/\/commons.wikimedia.org\/wiki\/File:Social_security_card.gif;<\/p>\n

So a short time ago I wrote about<\/a> Social Security\u2019s indirect provision of benefits for women who leave the workforce to take care of children, and as an incidental comment, cited Clinton\u2019s proposal to remedy the situation that<\/p>\n

The poverty rate for widowed women 65 or older is nearly 90 percent higher than for other seniors\u2014in part because when a spouse dies, families can face a steep benefit cut. For a two-earner couple, those benefit cuts can be as much as 50 percent. Hillary believes that we have to change that by reducing how much Social Security benefits drop when a spouse dies, so that the loss of a spouse doesn\u2019t mean financial hardship or falling into poverty.<\/p><\/blockquote>\n

Now, as astute readers pointed out, in the typical case, a surviving spouse is eligible to receive a Survivor\u2019s Benefit. \u00a0In the typical case, if a wife was receiving benefits based on 50% of her husband\u2019s benefit, because her pay had been lower and\/or she had had a lot of gaps in her career, then this benefit would increase to 100% upon her husband\u2019s death, so that the total Social Security benefit would drop only by 1\/3 \u2014 from 150% of the husband\u2019s benefit to 100%. \u00a0This seems to me to be perfectly fine. \u00a0(Remember, too, that if there are dependent children, the benefit increases further.)<\/p>\n

But it would seem that what Clinton is talking about is this: \u00a0in the same way as a wife* receives the greater of the benefit on her own earnings record, or her husband\u2019s record, so, too, a widow receives the greater of 100% of her deceased husband\u2019s benefit or the benefit earned under her own record<\/a>. \u00a0Hence, in a case where the husband and wife both had the same earnings history, the widow\u2019s benefits would, in fact, be a 50% drop because the survivor\u2019s benefit wouldn\u2019t be any greater than the benefit under her own record.<\/p>\n

(* Yes, I\u2019m writing \u201cwife\u201d and \u201chusband\u201d referencing\u00a0the traditional case that he\u2019s the higher earner, because it\u2019s easier to keep the two parties straight this way; \u201cspouse\u201d and \u201cother spouse\u201d gets too confusing.)<\/p>\n

But here\u2019s the deal: \u00a0the existing system already has benefits that only married couples can receive, vs. long-time cohabitors, because of the assumption that they protect women who left the workforce to care for children. \u00a0In the case that Clinton\u2019s talking about, that\u2019s not the case: \u00a0she simply wants to provide more money to widows on the basis that \u201ctwo can live as cheaply as one\u201d \u2014 that is, the fact that widows\u2019 living expenses do not drop by 50% upon the death of a spouse, because of the fixed expenses of housing, utilities, etc. \u00a0It would seem that she\u2019s proposing an additional benefit, on top of one\u2019s own Social Security benefit, rather than as a greater-of benefit.<\/p>\n

But that\u2019s a much larger question.<\/p>\n

Consider the Jane Plan<\/a>. \u00a0Recall that the first tier benefit is a flat benefit for all eligible individuals. \u00a0It is not, unlike the poverty level definition, reduced on a per-person basis for married couples. \u00a0This hardly seems fair in an era in which couples are perfectly comfortable making the pragmatic decision to stay unmarried when it comes to benefit eligibility. \u00a0Various other countries resolve this by treating \u201cpartnered\u201d couples the same was as married couples, but I don\u2019t know how you\u2019d prove that two cohabitators were \u201cpartnered\u201d rather than just roommates. \u00a0Perhaps they only count as \u201cpartnered\u201d those couples on a civil union registry of some kind, or perhaps there\u2019s a further test, such as whether the two have made each other will beneficiaries or granted medical power of attorney to each other, but this seems like it would get administratively complex to identify who are partners and who are roommates. \u00a0And at the same time, it seems to me that we\u2019d want to encourage, rather than discourage, old folks to have roommates of some kind, rather than living on their own.<\/p>\n

But, once we make the determination to keep the benefit at a per-person rate, and married couples thus have a higher total benefit than under a \u201cper-family\u201d benefit program, then they necessarily drop by 50%.<\/p>\n

And in the same way, a two-earner couple already had a much higher benefit, as a result of a much higher lifetime income, than a single-income family, and have been enjoying \u201ceconomies of scale\u201d relative to someone who never married and always lived on their own.<\/p>\n

What\u2019s more, the financial hardship a widow faces can be mitigated in the long-term, by changing living arrangements, for instance, moving from the family home to a smaller place \u2014 though, to be sure, this doesn\u2019t work in the case of a couple that were already living in tight quarters, as widow who shared the only bed, in the only bedroom, with her husband, isn\u2019t going to do so with a roommate!<\/p>\n

So what\u2019s fair?<\/p>\n

\u00a0<\/p>\n

image:\u00a0https:\/\/commons.wikimedia.org\/wiki\/File:Social_security_card.gif; originally produced by the Social Security Administration and in the public domain<\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"

So a short time ago I wrote about Social Security\u2019s indirect provision of benefits for women who leave the workforce to take care of children, and as an incidental comment, cited Clinton\u2019s proposal to remedy the situation that The poverty rate for widowed women 65 or older is nearly 90 percent higher than for other […]<\/p>\n","protected":false},"author":2209,"featured_media":4410,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[450],"tags":[54],"class_list":["post-5247","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-actuarial","tag-social-security"],"yoast_head":"\nA different viewpoint on survivor's benefits<\/title>\n<meta name=\"description\" content=\"So a short time ago I wrote about Social Security's indirect provision of benefits for women who leave the workforce to take care of children, and as an\" \/>\n<meta name=\"robots\" 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