Young Widow(er)s, Social Security, and Marriage
The Social Security program, like the federal income tax system, is not marriage neutral. In the income tax literature, when a couple faces a higher (lower) tax bill as a married couple than as two single individuals, it is said that the couple, in effect, faces a marriage penalty (marriage subsidy). Similarly, provisions in Social Security lead to marriage subsidies or penalties. In this paper, we examine marriage penalties associated with Social Security’s child– in–care benefits. These benefits are paid to widow(er)s who are caring for minor or disabled children. Benefits to the widow(er) terminate upon remarriage, giving rise to marriage penalties. We document the size of these penalties, discuss their likely effects on marriage decisions, and measure the cost of repealing the termination provision.
We find that the marriage termination provision in Social Security’s child-in-care program produces sizeable marriage penalties that likely do affect marriage decisions. For example, fifty-percent of widow(er)s face an annual penalty of $4,090 or more and ten percent face an annual marriage penalty in excess of $10,920 per year. Because of family size and PIA, minorities and young widows tend to face relatively smaller penalties, although the mean penalty still exceeds $3,300 per year for these groups. We estimate that complete repeal of the termination provision would increase program expenditures by a relatively modest amount of $222 million in 2003. It is likely that widow(er)s perceive larger penalties than actually exist. Therefore, we outline some simple steps that the Social Security Administration could take to let widow(er)s know that penalties are less severe than they seem. This practical approach to policy has some advantages: it is low cost and may promote marriage.