How Does Women Working Affect Social Security Replacement Rates?

April Yanyuan WuNadia S. KaramchevaAlicia H. Munnell Patrick Purcell

IB#13-10

The brief’s key findings are:

    • For married households, the amount of pre-retirement income replaced by Social Security depends on the labor force activity of both spouses.
      • At the high end, couples with a non-working spouse get the replacement rate from the worker’s benefit and from a spousal benefit.
      • At the low end, couples with two working spouses and identical earnings get the same replacement rate as an individual worker.
      • In the middle, couples see their replacement rate fall as the lower earner’s wages rise.
    • As women go to work, replacement rates decline.
      • They have dropped from 47 percent for those born early in the Depression to 42 percent for Early Boomers.
      • By the time that Generation Xers retire, replacement rates are projected to fall by an additional 5 percentage points.
    • In addition to women working, Social Security’s rising Full Retirement Age has also contributed to falling replacement rates.