green and red intersecting graph linesA study by the Center for Retirement Research at Boston College, entitled How Does Women Working Affect Social Security Replacement Rates?, has determined that the rise of women in the workplace has placed downward pressure on the amount of pre-retirement income required from Social Security. The study found that the amount of such income replaced by Social Security is dependent on the labor force activity of married couples as a unit, as opposed to treating everyone as an individual. Couples with non-working spouses receive replacement income from the worker’s benefits, replacing up to 60 percent of a couple’s pre-retirement income.

On the other end, couples where both spouses work and earn identical wages receive the same replacement rate as an individual worker (about 40 percent). In the middle, as the wages of the lower earning spouse rise, replacement rates fall. Additionally, as more women go to work, replacement rates fall dramatically.

Social Security replacement rates fell from 47 percent for workers born in the Depression Era to 42 percent for Early Baby Boomers. Once Generation X retires, rates are predicted to fall another five percentage points. The rising age of full retirement has also contributed to falling replacement rates, which is good news for the Social Security fund; but not so good for households who rely on Social Security as a primary source of retirement income.


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