The IWF is pleased to announce the forthcoming publication of the second booklet in our series “What Women Need to Know About Work and Money.” In this edition, Women & Retirement: Securing Your Financial Future, IWF economics advisor Meredith Munger Leyva addresses the important issues facing women and retirement, specifically the difficulties facing the nation’s Social Security system.

The following is an excerpt from our new booklet:

The following is an excerpt from our new booklet:

The following is an excerpt from our new booklet:

Have you ever wondered where all that money you’ve paid into Social Security has gone? Do you know how much of it you’ll get back when you reach retirement age? Will it be enough to live on when you retire? If you’ve pondered these and other questions about your future economic security, you’re not alone. Women today are a strong force in the American economy, but many of us are only beginning to ask the tough questions we need to ask about our financial futures.

Whether you are a young woman, a working Baby Boomer, or a retiree, you should be concerned about the health of our Social Security system. Women rely more on Social Security than men do. That’s because we live longer, require more long-term care, and typically have more intermittent work histories. Now is the time for women to get involved in the debate over Social Security’s future. We must take charge of our own financial destinies.

Social Security originally provided supplemental income for the elderly and a longer-term, government-run pension system for those who lived to very old age. Retirement benefits were paid out beginning at 65 years of age-the average age of mortality in those days. There was no concept of “retirement” as we understand it today. Congress amended Social Security in 1939 to allow benefits to be paid to widows and orphans in the event of the premature death of an insured worker.

You contribute to the Social Security system through payroll taxes?you pay 6.2 percent of your paycheck and your employer pays another 6.2 percent. For a person making $40,000 a year, for example, this amounts to $4,960 each year. Of course, your employer’s contribution is not charity. It is money that you would get if Social Security didn’t lay claim to it first.

The looming crisis in Social Security involves two things. First, people have come to depend on Social Security for all or a substantial portion of their retirement income. Nearly one-third of current retirees rely on Social Security for all of their income, while another third rely on it for a substantial portion of their income and probably could not do without it. Women are the most dependent. According to analyst Theresa J. Devine of the Congressional Budget Office, Social Security benefits represented more than half of family income for a majority of women age 65 and older, and an even greater share for widows and unmarried women.

A second factor is the difference in size between the Baby Boom generation and Generation X. Demographic changes mean that a system once supported by five workers for each retiree will change to 1.8 workers supporting each retiree during the peak of the Baby Boom retirement. Some experts warn that payroll taxes could increase from the current 15.3 percent to 26 percent. With federal, state, and local taxes, younger generations could face total tax rates as high as 72 percent of their total income!

Despite the seriousness of the Social Security crisis, most people expect to rely on Social Security for part or even all of their retirement income. But can you live on an average monthly Social Security check of $783?

In order to continue paying Social Security benefits to current retirees, difficult choices will have to be made. Proposals include higher taxes, fewer benefits for current retirees, and mandatory delayed retirement. These kinds of solutions, however, are temporary fixes that fail to address the underlying problems of the system. With each of them, in different ways, we ultimately find ourselves back at square one with no long-term, dependable retirement plan.

That is why now is the time for women to get involved in the debate over Social Security. Women today have the privileges of freedom and political power; there is no excuse for us not taking charge of our destinies by educating ourselves about retirement.

Social Security must be reformed. If we are going to resolve the underlying problems in the system, women must have a voice in reform. The Social Security system should treat all women fairly, whether they are working full- or part-time, are at home raising their children, or are already retired. But to achieve fairness, we first need to voice our concerns and have an open discussion about reform.