Financial Analysis on Retirement Implications for Women

Abstract

This study addresses some aspects of the financial impact on women under the Social Security benefits reform or redistribution. This paper presents a preliminary result of the study. A multiple decrement model (LL Model) is developed based on a proxy population of U.S. women and its demographic projection. Social Security benefits under current policy rules are then assigned to each sample unit in the resulting proxy population. The authors then compare aggregate benefit entitlement figures under current policies to figures obtained when potential policy change is implemented. For example, one potential policy change is the proposed de-coupled allocation policy, which involves changing the current benefit loss (ranging from 33-50%) upon spousal death to 40% in order to redistribute wealth and to help alleviate poverty in elderly widows. The analysis of the authors shows that this redistribution is more equitable for de-coupled allocation, of which the gross effect would not significantly increase Social Security payments. The redistribution also seeks to improve the financial condition of the American senior citizens who live below the poverty line.