A looming Social Security retirement challenge could hit one group of Americans especially hard
Women who rely on Social Security in retirement could face greater financial hardship than men if the program’s trust funds are depleted and benefits are cut in the coming years, according to a new analysis.
Women account for roughly 55% of Social Security beneficiaries age 62 and older, yet they receive considerably smaller monthly payments on average than men. FinanceBuzz found Washington, D.C., Hawaii and New York have some of the smallest differences between men and women, with women collecting about $1,760 per month compared with approximately $2,198 for men, creating an annual gap of more than $5,000.
The disparity has raised concerns among retirement advocates because current projections indicate Social Security’s trust funds could face funding shortfalls within the next decade if lawmakers do not act. Under existing law, beneficiaries could see automatic reductions if reserves are exhausted and Congress fails to approve a long-term solution.
Advocates for older Americans say women are particularly vulnerable because they are more likely to depend on Social Security as a primary source of income during retirement. Researchers at the National Women’s Law Center note that many older women have fewer retirement savings and are more likely to experience financial insecurity later in life.
The financial challenges are especially pronounced among older single women, including those who are widowed, divorced or never married. National Women’s Law Center data show poverty rates among these groups are substantially higher than those of married women, highlighting the role Social Security plays in preventing economic hardship for millions of retirees.
Experts say the benefit gap stems largely from differences in lifetime earnings. Because Social Security benefits are calculated using a worker’s earnings history, longstanding wage disparities between men and women continue to affect retirement income decades later. According to U.S. Census Bureau data, women working full time still earn less on average than their male counterparts.
Additional factors also contribute to lower benefits. Women are more likely to take time away from the workforce to care for children, aging parents or family members. They are also more likely to work part-time jobs, which often result in lower lifetime earnings and reduced Social Security benefits. Analysts say these career interruptions can have lasting effects on retirement income calculations.
The size of the benefit gap varies across the country. FinanceBuzz found states such as Washington, D.C., Hawaii and New York have some of the smallest differences between men and women, while states including Utah, Louisiana and Wyoming report some of the largest disparities. Researchers attribute many of those differences to regional employment patterns and dominant industries.