Social Security Benefit Enhancements for Women Act of 2002

 Background

Social Security provides income security to nearly 46 million Americans and is particularly important to women who live longer, earn less, take time away from the workforce to care for kids, and have less pension and asset income than men. 

Social Security’s lifetime inflation-adjusted benefits, spouse and survivor benefits, and progressive benefit formula provide critical protections for women.  Without Social Security, more than half of elderly women would live in poverty.

For these reasons, restoring Social Security’s solvency for the 21st century and beyond is a national priority for the public, Congress, and the President.  We can get down to the business of saving Social Security and start building a foundation of common ground by taking a modest step to enhance Social Security benefits for women, without jeopardizing the financial position of the trust funds. 

Summary

The Social Security Benefit Enhancements for Women Act of 2002 improves fairness and updates benefit eligibility requirements, resulting in higher benefits and expanded eligibility for elderly and disabled widows and divorced spouses, who are among the most likely to live in poverty.  Once implemented, over 120,000 women will see enhancements.   

Benefit Enhancements:

The Social Security Benefit Enhancements for Women Act of 2002
Increasing Protections for Today’s Women

Widows

Current law- if a worker retires early, his benefit is reduced because he’s expected to collect benefits for a longer period of time.  The exact amount of reduction depends on the worker’s age when he retired. 

Women may receive widow’s benefits based on their husband’s earnings, and these benefits generally cannot be higher than those their husband received.  Thus, if the worker retired early and was receiving reduced benefits, the widow’s benefits are limited because of it for the rest of her life, even if her husband only collected benefits for a few months before dying.  This unfairly penalizes widows whose husbands both retired and died at an early age. 

New provision- beginning in December 2002, this provision ends this penalty by crediting months in which the worker was deceased after retirement but before the full retirement age back toward the limitation on the widow’s benefit.  

Real Life Example

Harry is married to Jane, who is two years older than he.  Harry applied for Social Security retirement benefits at age 62.  Because he received benefits before the full retirement age that applies to him (age 65), his benefit is “actuarially reduced” by 20%, so that he receives $720.  Harry dies a year later at age 63.  Jane is eligible to receive widows’ benefits on Harry’s account.  Under current law, she would receive the greater of (1) 82.5% of his full benefit* or (2) the benefit Harry would be receiving if he were alive (80% of his full benefit).  Thus, Jane’s benefit would be $742. 

Under the Social Security Benefits Enhancements for Women Act, Jane would Receive $839.

*82.5% represents the widow benefit payable at age 62 prior to scheduled increases in the full retirement age.

Disabled Widows

Current law- a widow must be at least 60 years old to collect widow’s benefits.  However, if she is at least 50 years old and became disabled within 7 years of her spouse’s death, she may collect benefits as a disabled widow. 

When the 7-year window was enacted in 1967, it allowed women with little or no time in the workforce prior to a husband’s death to still qualify for benefits on her husband’s earnings while working to become qualified based on her own earnings.  At that time, it took up to 7 years for a woman to qualify for benefits based on her own earnings, exactly the amount of time covered by the 7-year window.  However, because earnings requirements have changed over time, today’s workers need up to 10 years to qualify for benefits based on their own earnings. 

New provision- beginning in December 2002, this provision repeals the 7-year window of eligibility. This will ensure widows age 50 and older may be eligible for Social Security benefits, either as a disabled widow, aged widow, or based on their own earnings.

Real Life Example

 Janet and Joe are the same age and were married up until Joe’s death at age 50.  Janet was a homemaker, but starting working as a secretary after Joe’s death.  She became disabled at age 58.    Under current law, Janet could have potentially received a disabled widow’s benefit of $523* per month based on Joe’s earnings, but did not qualify because more than 7 years elapsed since Joe died, and she did not have enough earnings to qualify for benefits based on her own work.

Under the Social Security Benefit Enhancements for Women Act, Janet would receive a disabled widow’s benefit.

* $523 represents the average disabled widow benefit in December 2000

Divorced Spouses

Current law- a spouse cannot collect benefits on her husband’s earnings record unless he is also collecting benefits.  Also, if her husband has earnings over the limit for the senior earnings penalty, her spousal benefits could be reduced.  Divorced spouses are not subjected to these restrictions as long as the divorce as been in place for 2 years and the ex-spouse is at least age 62.  The 2-year wait was enacted to prevent people from getting divorced merely to avoid restrictions on spousal benefits.

New provision- beginning in December 2002, this provision eliminates the requirement that a divorce must have in place for two years in cases where the worker remarries during this waiting period.  This provision helps women whose divorces were not sham divorces, since the worker remarried.

Real Life Example

Jennifer has been divorced from her former husband for one year, and her husband has remarried.  She is potentially eligible to collect Social Security spousal benefits of $427* a month on her former husband’s account, but under current law she has to wait until two years have elapsed since the time of the divorce before she can receive benefits.

Under the Social Security Benefit Enhancements for Women Act, she would begin to receive benefits as soon as the former spouse remarries. 

* $427 represents the average benefit in December 2000