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SOCIAL SECURITY: IS A KEY FOUNDATION OF 

ECONOMIC SECURITY WORKING FOR WOMEN? 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

DECEMBER 9, 2014 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

RON WYDEN, Oregon, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

SHERROD BROWN, Ohio 

MICHAEL F. BENNET, Colorado 

ROBERT P. CASEY, Jr., Pennsylvania 

MARK R. WARNER, Virginia 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

ROB PORTMAN, Ohio 

PATRICK J. TOOMEY, Pennsylvania 

JOSHUA SHEINKMAN, Staff Director 

CHRIS CAMPBELL, Republican Staff Director 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee on 

Finance .................................................................................................................. 1 

Hatch, Hon. Orrin G., a U.S. Senator from Utah ................................................. 3 

WITNESSES 

Perrin, Barbara, Social Security beneficiary, Eugene, OR ................................... 5 

Dodd, Catherine J., Ph.D., R.N., chair, board of directors, National Committee 

to Preserve Social Security and Medicare, Washington, DC ............................ 7 

Slavov, Sita Nataraj, Ph.D., professor of public policy, George Mason University, and visiting scholar, American Enterprise Institute, Washington, DC .. 8 

Barr, Janet, actuary, American Academy of Actuaries, Chicago, IL ................... 10 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Barr, Janet: 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 21 

Responses to questions from committee members ......................................... 34 

Dodd, Catherine J., Ph.D., R.N.: 

Testimony .......................................................................................................... 7 

Prepared statement .......................................................................................... 46 

Responses to questions from committee members ......................................... 52 

Hatch, Hon. Orrin G.: 

Opening statement ........................................................................................... 3 

Prepared statement .......................................................................................... 57 

Perrin, Barbara: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 60 

Slavov, Sita Nataraj, Ph.D.: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 63 

Responses to questions from committee members ......................................... 68 

Wyden, Hon. Ron: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 79 

COMMUNICATIONS

AARP ........................................................................................................................ 81

American Association of Univeristy Women (AAUW) .......................................... 82 

Strengthen Social Security Coalition ..................................................................... 88 

Women’s Institute for a Secure Retirement .......................................................... 93 

(III) 

(1) 

SOCIAL SECURITY: IS A KEY 

FOUNDATION OF ECONOMIC SECURITY 

WORKING FOR WOMEN? 

TUESDAY, DECEMBER 9, 2014 

U.S. SENATE, 

COMMITTEE ON FINANCE, 

Washington, DC. 

The hearing was convened, pursuant to notice, at 9:40 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Ron Wyden 

(chairman of the committee) presiding. 

Present: Senators Stabenow, Cantwell, Brown, Casey, Hatch, 

Grassley, Crapo, and Thune. 

Also present: Democratic Staff: Kara Getz, Senior Tax Council; 

Tom Klouda, Senior Domestic Policy Advisor; Jocelyn Moore, Deputy Chief of Staff; and Kelly Tribble Spencer, Detailee. Republican 

Staff: Jeff Wrase, Chief Economist. 

OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR 

FROM OREGON, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The Finance Committee will come to order. Beginning our session, I would first like to congratulate Senator 

Hatch, who will be the upcoming chairman of the Senate Finance 

Committee. I am going to have more to say about Senator Hatch 

when we have the tax bills on the floor of the Senate. 

Senator HATCH. That is what I am worried about. [Laughter.] 

The CHAIRMAN. Yes. It is certainly an ominous time for you. 

[Laughter.] Suffice it to say, Senator Hatch is going to continue the 

long tradition of bipartisanship that has been the hallmark of the 

Finance Committee, and the Finance Committee is going to remain 

the go-to place for developing economic policies that make people’s 

lives better, in both Oregon and Utah and across the country. 

Senator Hatch, as I said, I will throw some more bouquets on the 

floor, but I wanted you to know that as we begin. 

Senator HATCH. I think that is enough bouquets. 

The CHAIRMAN. Okay. Well, you will have to take a few more. 

Today we are going to examine, in particular, the question of retirement and the gap between what sort of retirement people would 

like to enjoy and what, unfortunately, is the reality for so many 

Americans, and particularly older women. People who had dreams 

of well-earned relaxation and travel to visit loved ones in faraway 

destinations, instead of having that, are walking on an economic 

tightrope trying to balance the food costs against the fuel costs, and 

2 

the fuel costs against the medical bills. And any unexpected occurrence can, in effect, push them off of that tightrope. 

According to the Census Bureau, retired women are nearly twice 

as likely as retired men to live in poverty. Data from 2011 shows 

that women are falling deeper into poverty much more quickly 

than men. Instead of that worry-free ideal that I mentioned, those 

women are, in effect, simply trying to find a way to pay for the essentials, and their experiences stand in stark contrast to the national trend of seniors living a middle-class life. 

So this is a growing crisis fed by a confluence of factors, a number of which do not begin at age 65. Employed women earn about 

78 cents on the dollar compared to men, and they are more likely 

to leave a job or cut back on hours to care for children or older parents. So in many instances, they have little or no savings. 

According to the Social Security Administration, millions of 

women—far more than men—depend on Social Security for nearly 

all of their income when they retire. Because women live longer on 

average, their savings accounts get squeezed at both ends. So the 

real question that we are going to pursue today is this: is the Social 

Security safety net, which keeps 15 million older people, including 

9 million women, from tumbling into poverty, strong enough? Are 

there holes in the safety net? Are there ideas that, on a bipartisan 

basis, this committee can pursue to strengthen the economic hand 

of so many vulnerable older women? 

To help illustrate how the crisis impacts women nationwide, we 

are very fortunate to be joined by Barbara Perrin of Eugene, OR. 

She worked hard. She planned for her retirement, did her best to 

save, and, as we talked about a little bit ago, she really just got 

hit by an economic wrecking ball. She was in a situation where her 

mortgage was underwater, where she was divorced, and she had 

been raising a child who I gather is now grown. Her industry 

changed, literally, under her feet. 

What I like so much about Barbara is, she is a real fighter. We 

got together in Eugene on a retirement discussion program, and I 

just walked away and said, she is something else. That is why we 

wanted to have her come today, and she is going to talk about what 

women are faced with. 

So we are going to kick this discussion into high gear now to look 

at how women can have greater financial security. We have an expert panel of witnesses who are going to shed light on several ways 

to strengthen the safety net. 

One proposal that will be discussed is boosting the Social Security benefits for women who outlive their spouses. 

Another would give caregiver credits for individuals who leave 

their jobs to take care of children or disabled or elderly family 

members. With those credits, caring for a loved one would no 

longer come at the cost of a reduced Social Security benefit later 

in life. 

A third idea would close the gap between disabled widows or 

widowers and others who receive Social Security Disability. That 

concept would look at ending benefit reductions, time limits, and 

other restrictions. 

3 

And finally, there has been interest in revising student benefit 

rules and removing gender bias from Social Security, so that couples and their kids, regardless of gender, could get equal benefits. 

So this is an important hearing. This will be my last hearing as 

chair, and I want our panel members to know that the reason why 

I thought this was so important is, this really goes back to my 

roots. I was co-director of the Oregon Gray Panthers for many 

years. Barbara and I were talking about that beforehand. 

What this election was about is talking about people, real people, 

not polls and theories and the like, but talking about what it is like 

for real people. And we are going to have a chance to do that today 

because of all of you, and we are going to tackle these issues in a 

bipartisan way. 

[The prepared statement of Chairman Wyden appears in the appendix.] 

OPENING STATEMENT OF HON. ORRIN G. HATCH, 

A U.S. SENATOR FROM UTAH 

Senator HATCH. Well, thank you, Mr. Chairman, and thank you 

for your kind remarks earlier. We do have a good relationship, and 

I believe we can work in a very good, bipartisan way and hopefully 

bring both sides together to get more done than we have in the 

past. We will at least be trying, you and I together. 

The CHAIRMAN. We will get it done. 

Senator HATCH. And we are grateful to have Senator Grassley 

here, who used to chair the committee, and who is, of course, tough 

to beat around here. 

Senator GRASSLEY. Well, thank you. 

Senator HATCH. And also Senator Crapo, who is a big deal on 

Budget and Banking—— 

The CHAIRMAN. I am running with the right crowd. 

Senator HATCH [continuing]. And certainly a big deal here as 

well. 

I think today’s hearing is important, and we want to thank all 

of you witnesses for appearing and joining us today and helping us 

to understand this better. Much of the structure of the Social Security system was designed long ago, when the labor market and life 

experiences of women were far different than they are today and 

what they will be in the future. 

I believe there is room for modernizing Social Security to better 

address modern family situations, though any such effort must acknowledge that Social Security’s promises, as currently structured, 

are unsustainable. Given the existing structure of benefits, Social 

Security already faces a gaping $10.6-trillion financial shortfall 

over the next 75 years. 

Given that reality, we have a choice. Either we responsibly work 

to modernize benefits while also addressing Social Security’s financial challenges, or we can kick the can down the road and place the 

burden on future generations. Alas, that has kind of been what has 

happened over the years. 

There are some reform proposals out there, though many of the 

proposals I have seen would expand benefits here or there using 

trust fund revenue from higher taxes, all while largely, if not entirely, ignoring the program’s financial realities. To provide some 

4 

context to those realities, the Congressional Budget Office says 

that, given existing benefit promises, we would have to raise payroll taxes by more than 25 percent to put Social Security in financial balance over the next 75 years. 

That would clearly mean significant increases in taxes on lowerwage earners as well as the middle class. Or, if you wanted to close 

the financial gap by raising the earnings cap on Social Security 

taxes to 90 percent of covered earnings—an approach that many of 

my Democratic colleagues prefer—you would have to raise the cap 

from next year’s scheduled $118,500 to around $242,000. And, even 

if you did that, you would still have to increase overall payroll 

taxes on everyone by more than 18 percent. 

So, no matter how you look at it, if we are going to shore up Social Security solely on the revenue side, middle-class workers will 

be hit with a massive tax hike, even though their real incomes 

have barely gone up at all in recent years. I do believe that there 

are ways for us to improve and modernize the Social Security system while also responsibly attending to the finances. We can and 

we should work to provide better protection against old-age poverty, which is disproportionately experienced by women, especially 

never-married and divorced women. 

For example, the President’s chained CPI proposal in one of his 

past budgets, which the Social Security Administration supported, 

provided such a focus by including protections for vulnerable populations, including Social Security beneficiaries facing old-age poverty. Meanwhile, there are a number of avenues of redistribution 

within Social Security, between singles, two-earner couples, and 

one-earner couples. 

For example, a high-income one-earner couple generally gets 

higher returns from Social Security than a low-income two-earner 

couple, despite the progressivity of the basic benefit formula. And 

the incredibly complicated number of possible claiming strategies 

for Social Security beneficiaries makes it mind-numbingly difficult 

for recipients to figure out their best benefit claiming and retirement decisions. 

One of our witnesses today, Professor Slavov, has identified that 

Social Security benefit claimants could be making retirement decisions costing them large amounts of potential retirement wealth. 

Many of those affected are women. Those costly choices are fine if 

made with full understanding of their implications. They are not 

fine if they are made unwittingly because of unnecessary complexity in the Social Security system. 

The Social Security Administration tells us that, ‘‘Social Security 

is neutral with respect to gender or race or ethnicity. Individuals 

with identical earnings are treated the same in terms of benefits.’’ 

That is true in that every worker has equal access to the same benefit determination formula. However, despite the neutrality in the 

determination of benefits, outcomes vary significantly across genders, races, and ethnicities. 

Social Security benefits earned by women are influenced by their 

labor market experiences which generated the wages that get fed 

into the benefit determination formula. Benefits for women also depend on marital status, lifespans, and other factors, all of which 

5 

have been subject to significant changes over time, which has affected how women experience Social Security. 

Mr. Chairman, I am happy to work with you or with anyone to 

examine these issues, and work to modernize how Social Security 

deals with modern family situations. Of course, dealing with these 

issues, as with all issues relating to Social Security, will require 

both sides to work together. 

If we are going to get anything done, it will require that the 

President engage. Unfortunately, to date, the President has been 

largely silent regarding Social Security, saying only that he does 

not wish to increase taxes, including payroll taxes on the middle 

class. 

Yet, as I stated earlier, if Social Security reform is going to come 

only on the revenue side, he likely will not have a choice but to 

raise taxes on everyone, and raise them significantly in order to 

shore up the system. As you can see, Mr. Chairman, we have a lot 

of work ahead of us when it comes to Social Security, and I want 

to thank you again for holding today’s very important hearing. 

The CHAIRMAN. Thank you, Senator Hatch. I know we are going 

to work together on these issues, and let us get on with the good 

ideas. 

[The prepared statement of Senator Hatch appears in the appendix.] 

The CHAIRMAN. In addition to my inspiring constituent, Ms. 

Perrin, who comes from Eugene, we have Dr. Catherine Dodd, 

chair of the board of directors for the National Committee to Preserve Social Security and Medicare; Dr. Sita Slavov, who is a professor of public policy at George Mason University and a scholar 

at the American Enterprise Institute; and our final witness, Ms. 

Janet Barr, who is chair of the Social Insurance Committee for the 

American Academy of Actuaries. Thank you all for coming. 

We are going to make your prepared statements a part of the 

hearing record in their entirety, if you could just take 5 minutes 

or so to summarize. We are going to have votes, I know, in a little 

bit, so you are going to see Senators coming and going. 

How appropriate to start with Oregon. Ms. Perrin, please go 

ahead. 

STATEMENT OF BARBARA PERRIN, 

SOCIAL SECURITY BENEFICIARY, EUGENE, OR 

Ms. PERRIN. Thank you, Chairman Wyden. Good morning, everyone, Ranking Member Hatch, and members of the committee. 

Thank you for inviting me to testify today. My name is Barbara 

Perrin. I am a mother, a grandmother, a resident of Eugene, OR, 

and an AARP volunteer. I was born in 1946, the same year as 

President Bill Clinton, President George W. Bush, Steven 

Spielberg, and Susan Sarandon, the leading edge of the baby-boom 

generation. 

Our generation has witnessed great transformations. We came of 

age in an era of amazing technological transition, from black and 

white television to downloaded movies, from rural telephone party 

lines to social media that span the globe, and from typewriters to 

personal computers. 

6 

Equally great have been the societal changes my generation has 

experienced: the civil rights movement, the women’s movement, 

changes in laws regarding the institution of marriage, and now 

even legal possession of marijuana. As a child of the 60s, this still 

astonishes me. 

One thing that has not changed, though, through the years is the 

importance of Social Security, especially for women. It has reliably 

provided retirement, disability, and survivor income to generations 

of American workers, even as the American workplace and family 

have changed. 

My father, born at the turn of the last century, was a selfeducated blue-collar worker who had no retirement income beyond 

Social Security. He gratefully collected his modest benefit because 

he had survived the Depression and understood the value of having 

any retirement income, no matter how small. My mother also 

worked her whole life, but never earned as much as my father did 

to benefit from the contributions that she had made. Instead she 

lived for years on the widow’s benefit she received after my father 

died. 

Like many women of my generation, I imagined my life would resemble that of generations of women who came before: marriage 

and children, and perhaps some meaningful work as well. However, 

many of us were swept along with the changing times and found 

ourselves leading lives different than the ones we had envisioned. 

As a divorced, single parent with no child support and only a liberal arts degree and very few resources, I cobbled together a series 

of low-paying, flexible jobs on which to survive while caring for my 

family, my two children. All along, while I worked, I paid into Social Security, but, as a single mother raising a family on my own, 

saving money for my retirement was not possible. 

Eventually, I worked my way into a professional career in educational publishing with a middle-class income, but by the time I 

was earning a better income, I was in my 50s and had very few 

years left in which to build up savings for my retirement. Thankfully, a lifetime of frugal habits had enabled me to start a small 

nest egg and to buy a modest home, which I had always been 

taught was a safe and reliable investment. 

In early 2010, I moved from Colorado back to Oregon to be with 

my daughter and grandson. I left with some savings, my hope to 

sell the home in Colorado that I owned there, and a plan to start 

a publishing consulting business. Unfortunately, the housing market dropped, and I had to rent out my home. I could not find reliable tenants. They failed to pay their rent and would not leave. 

I also began to look for employment in addition to clients, but the 

print/publishing world was also in great transition, and, combined 

with the slow job market and perhaps my age, I was not successful 

in finding either a job or clients. 

Eventually I had to use up my savings to pay the mortgage on 

my home until those funds ran out. The house recently went into 

foreclosure while I waited for a lender to approve a buyer. Thankfully, my home finally closed 2 weeks ago. While I am relieved that 

I no longer have that burden, my savings have been depleted. 

I had always planned to continue working and to supplement my 

income with my Social Security, my savings, and my home equity. 

7 

Instead I am living on Social Security alone. My benefit, while reliable, is also low, and I need food stamps and energy assistance to 

make ends meet. It was really hard for me to sign up for these, and 

I want to move off them as quickly as I can, but my Social Security 

is not enough to live on. 

Four years ago, this was not what I envisioned for myself. I know 

that many were affected by the recession, some far worse than I, 

losing their health, not just their savings. But like my own parents, 

I am at least grateful that I have my Social Security, and I appreciate the value of having any retirement income, no matter how 

small. Thank you. 

The CHAIRMAN. Ms. Perrin, thank you. As I said, some colleagues 

have come in. Ms. Perrin—if I think of her, I think about fighting, 

and I think about fighting back and looking at plans and speaking 

up for others, as I saw you do in Eugene. So I am just very pleased 

you are here. I will have some questions in a moment, and thank 

you for coming. 

[The prepared statement of Ms. Perrin appears in the appendix.] 

Dr. Dodd? 

STATEMENT OF CATHERINE J. DODD, Ph.D., R.N., CHAIR, 

BOARD OF DIRECTORS, NATIONAL COMMITTEE TO PRESERVE SOCIAL SECURITY AND MEDICARE, WASHINGTON, DC 

Dr. DODD. Thank you, Chairman Wyden and Ranking Member 

Hatch, for the opportunity to testify here today. Thirty-two years 

ago, the National Committee was created by Congressman James 

Roosevelt, the son of President Franklin Roosevelt and First Lady 

Eleanor Roosevelt. 

Through the years, we have focused on protecting their greatest 

achievement, Social Security. And now it is in the spirit of our Roosevelt heritage and Eleanor’s work on women’s issues that we have 

launched ‘‘Eleanor’s Hope,’’ an initiative to focus greater attention 

on women’s retirement issues. 

While women have come a long way since Eleanor’s day, several 

inequalities continue to threaten our important retirement security. For example, women have been, and continue to be, subjected 

to persistent gender wage discrimination leading to smaller Social 

Security benefits, as you have mentioned. Women often give up 

jobs and paychecks to care for children and elderly parents, and 

this leads to reductions in their Social Security benefits. Women 

are less likely to have a pension, and, even if they do have a pension income, it is usually less than what men receive. Women live 

longer than men, and consequently are more likely to outlive their 

retirement savings. 

A growing number of older women rely on Social Security for all 

or most of their income in retirement. Without Social Security, over 

half of these women would be living in poverty. Even with Social 

Security, 11 percent of older women still live in poverty. For widows, the poverty rate is worse at 15 percent, which is 50 percent 

higher than the poverty rate for all people 65 or older. 

Although Social Security is gender-neutral, life is not. Women 

pay the price of that inequity as long as they live. As a result of 

lower lifetime earnings, the average monthly Social Security benefit of a retired woman in 2012 was $1,103, while the average 

8 

monthly benefit of a retired man was $1,417. These facts led to the 

National Committee’s decision to prioritize the ‘‘Eleanor’s Hope’’ vision of retirement equity through supporting legislation that rights 

the economic wrongs threatening millions of retired women. 

To that end, we support several proposals that would improve 

benefit equity for women—which are explained in my written testimony—and I would like to highlight a few of our recommendations. 

First, we support improving Social Security survivor benefits, because it would treat one-earner and two-earner couples more fairly 

and would reduce the likelihood of survivors falling into poverty. 

We believe Social Security credits should be given to caregivers 

who must leave the workforce to care for children and elderly family members. We propose that future cost-of-living adjustments be 

based on a fully developed Consumer Price Index for the Elderly 

or CPI–E. The CPI–E would more accurately measure the rising 

prices of goods and services paid by seniors than the current urban 

and clerical worker index does. 

Seniors age 85 or older, and women in particular, are more likely 

to be financially vulnerable, even with Social Security. To ensure 

additional security, we support a benefit bump-up for all beneficiaries 20 years after retirement. To make these important proposals affordable, the National Committee supports strengthening 

the financing of the Social Security program by eliminating the cap 

on the Social Security payroll contributions. 

Mr. Chairman, 3 decades of stagnant middle-class wages and 

eroding retirement benefits are threatening to put millions of retirees on a highway to hardship. Women are on a more troubling 

road, because we face this retirement crisis and bear the burden 

of economic inequality. The proposals I have discussed today will 

address Social Security inequality for women and help to ensure a 

livable retirement for more Americans. We applaud Senators Tom 

Harkin, Mark Begich, Patty Murray, and other members who have 

introduced many of these proposals as legislation. 

Eleanor Roosevelt devoted 40 years to gender equality by advancing women politically, economically, and socially. To continue the 

work she started, I urge the Finance Committee to approve legislation that will ensure women have as much protection against retirement, disability, and survivorship risks as men do. 

Thank you for the opportunity to testify today. 

The CHAIRMAN. Thank you. That was very helpful. 

[The prepared statement of Dr. Dodd appears in the appendix.] 

The CHAIRMAN. Dr. Sita Slavov, welcome, and please proceed. 

STATEMENT OF SITA NATARAJ SLAVOV, Ph.D., PROFESSOR OF 

PUBLIC POLICY, GEORGE MASON UNIVERSITY, AND VISITING SCHOLAR, AMERICAN ENTERPRISE INSTITUTE, WASHINGTON, DC 

Dr. SLAVOV. Thank you, Chairman Wyden, Ranking Member 

Hatch, and members of the committee, for the opportunity to speak 

to you today about women and Social Security. 

Social Security’s rules are gender-neutral, but they can affect 

men and women in different ways because of differences in their 

work histories. Women have, on average, lower earnings than men, 

and they are also more likely to take time out of the labor force. 

9 

As a result, around half of female beneficiaries receive higher benefits as a spouse or survivor than as a worker claiming on their own 

record. 

As many of us have mentioned, one serious concern for policymakers is the relatively high rate of poverty among unmarried 

older women. Many of these women are widows who receive survivor benefits. 

So I am going to make two points today: first, household decisions about when to claim Social Security matter a lot, and they 

especially matter for women; second, Social Security spousal and 

survivor benefits should be modernized to better serve today’s twoearner families. 

On the first point, Social Security provides a survivor benefit 

that is tied to the primary earner’s actual benefit. That, in part, 

depends on when the primary earner claims benefits. A primary 

earner who delays claiming until age 70 leaves the surviving 

spouse with a benefit that is up to 60 percent higher than it would 

have been if the primary earner had claimed at 62. 

However, empirically, if you look at the data, many primary 

earners claim right at age 62, and very few delay beyond their normal retirement age. My research with my co-author, John Shoven 

of Stanford University, suggests that most people can benefit from 

delaying claiming. 

Professor Shoven and I have shown that, given today’s low real 

interest rates, many couples can increase the lifetime value of their 

Social Security benefits by 14 to 19 percent through optimal delay. 

These delays could be financed by tapping into other retirement assets like IRAs and 401(k)s, or they could be financed by working 

longer. The gains from delaying Social Security are particularly 

large for primary earners, precisely because delay by primary earners boosts benefits for widows. 

Other researchers have used a sample of actual couples, and they 

have shown that, in the event of widowhood, women receive benefits that are 17 percent lower over their remaining lifetime as a result of early claiming by their husbands. So, given all of that, it is 

somewhat of a puzzle why primary earners claim benefits so early. 

Social Security’s rules are complex, and the gains from delay 

have increased substantially in the past 15 years or so. So individuals may not be fully aware of how much money they are leaving 

on the table by claiming early. Some recent studies have shown 

that people’s claiming ages are affected by the way in which the 

claiming decision is framed. So it could be worth spending some 

time carefully considering what information is available to individuals when they make their claiming decisions, and how that information is presented. 

Now, coming to my second point, reforms that modernize Social 

Security’s family benefits would also improve the way that Social 

Security treats women. Many of Social Security’s family benefits 

were designed in the 1930s, when single-earner families were the 

norm. 

Social Security’s rules allow spouses who stay out of the labor 

force to collect a spousal benefit even if they paid no payroll tax. 

The spousal benefit is paid regardless of financial need, and the 

10 

spouses of higher-income individuals qualify for higher spousal 

benefits. 

This formula gives one-earner couples higher benefits than twoearner couples who paid the same amount in payroll taxes through 

their lifetime. It also provides a financial disincentive for women 

who expect to claim a spousal benefit to work outside the home, because these women will need to pay payroll taxes on their earnings 

without receiving any additional Social Security benefits. 

Researchers at the Urban Institute have examined the impact of 

several expenditure-neutral reforms that would modernize Social 

Security’s family benefits. For example, spousal and survivor benefits could be replaced with earnings-sharing in which half the couple’s total earnings are accredited to each member of the couple, 

and that could be combined with a provision to protect survivors. 

Alternatively, a reduction in spousal benefits could be combined 

with a minimum benefit that anyone can receive. Finally, spousal 

benefits could be replaced with caregiver credits for those who raise 

children, or become caregivers in other ways. These researchers 

find that all of these reforms would reduce disparities between oneand two-earner couples and reduce poverty. 

Thank you very much. 

The CHAIRMAN. I just wanted to make sure, Doctor, on that 

earnings-sharing concept—which is something I have always found 

very interesting and attractive—you are talking about something 

that would be voluntary, right? 

Dr. SLAVOV. Not necessarily. I believe some of the proposals that 

have been considered in the past would simply replace spousal and 

survivor benefits with earnings-sharing combined with some protections for survivors. 

The CHAIRMAN. We will want to hear more from you about that, 

because I have always thought it was a very promising idea, and 

apparently, with the economics, there may be some winners and 

losers. 

Dr. SLAVOV. Yes, certainly. 

The CHAIRMAN. So I am anxious to talk with you about it. 

[The prepared statement of Dr. Slavov appears in the appendix.] 

The CHAIRMAN. All right. Let us go now to Ms. Barr. 

STATEMENT OF JANET BARR, ACTUARY, 

AMERICAN ACADEMY OF ACTUARIES, CHICAGO, IL 

Ms. BARR. Chairman Wyden, Senator Hatch, and distinguished 

members of the Senate Finance Committee, thank you for the opportunity to testify today. My name is Janet Barr, and I am representing the American Academy of Actuaries. 

The Academy is a nonpartisan professional association representing all actuaries in the United States. Our mission is to serve 

the public by providing independent and objective actuarial information to help in the formation of sound public policy. 

The purpose of my testimony is to, first, provide data on the 

gender-related factors that cause differences in the adequacy of retirement benefits between men and women; and second, to describe 

the principles of income equity and social adequacy so that we can 

use them in talking about the impact of reform options on women. 

Third, I want to describe the spouse and surviving spouse benefits 

11 

in more detail and provide examples of several simplified situations. This is intended to give background to help in the discussion 

of whether Social Security is working for women. 

In general, Americans’ Social Security benefits are based on their 

average indexed earnings in their 35 highest-paid years. Social Security rules are gender-neutral, so that a woman who retires with 

the same lifetime earnings as a man will receive the same monthly 

benefit. However, some of the program rules have a different impact on women, because the average work history is not the same 

for a woman as for the average man. 

Women are more likely than men to be out of the workforce or 

to have breaks in employment. Women, on average, earn less than 

men. Women live longer, on average, than men and so will need 

more assets in retirement. Women are more likely than men to be 

single, widowed, or divorced in retirement. This combination of factors means that the average woman has a higher risk of insufficient income and savings in her retirement years. 

Switching gears, my testimony explains how Social Security was 

designed based on two competing principles: individual equity and 

social adequacy. The term ‘‘individual equity’’ has been used to describe the savings or investment aspects of the program. The term 

‘‘social adequacy’’ has been used to characterize the benefit adequacy and social insurance aspects of the program. 

When evaluating reform proposals and their impact on women, 

it is important to consider the trade-offs between individual equity 

and social adequacy. The social adequacy features of Social Security benefit all Americans, since they provide a form of insurance 

against the adverse financial effects associated with the uncertainties in life. The individual equity features allow the system to be 

seen as fair by all Americans and take away some of the risks of 

providing retirement income. 

Now for my third point, I would like to direct your attention to 

the slide—Table 6 in my written testimony—which shows spouse 

and surviving spouse benefits. When the current benefit structure 

was set up, the traditional roles of men in the family as primary 

wage earners and women as the primary childcare providers were 

well-established. 

As one of the social adequacy design features, the current system 

allocates benefits disproportionately, relative to taxes, to oneearner couples compared with two-earner couples and single people. As my slide shows, the single-earner couple on the left has 

higher benefits than the two-earner couple on the right 

In summary, the current Social Security law is gender-neutral. 

It contains spousal and other subsidized benefit provisions that 

mitigate, but do not eliminate, the impact of gender-related factors 

that produce lower benefits for women. It is worth noting that the 

present system provides a lower level of benefits relative to Social 

Security taxes paid for two-earner families where the second earner 

has a significant income. 

As members of Congress evaluate options to reform the Social 

Security system, you should not only address its financial problems, but also consider that Social Security remains an even more 

important source of retirement income for many women than men. 

12 

In closing, I want to thank you for the opportunity to present 

some ideas on behalf of the American Academy of Actuaries, and 

I would be happy to answer any questions. 

The CHAIRMAN. Thank you very much, Ms. Barr. 

[The prepared statement of Ms. Barr appears in the appendix.] 

The CHAIRMAN. All of you have been excellent, and we appreciate 

it. 

Let me start with you, if I might, Ms. Perrin. Almost like in our 

earlier conversation in Eugene, you are being very modest, and I 

am just struck by the fact that, through your life, you always were 

doing what was right. You were frugal, you supported your spouse, 

you raised a child, you volunteered, you just always were there 

doing what was right. 

Then retirement comes along and sort of hits you like a wrecking 

ball. The mortgage is underwater, and you had the divorce, and the 

publishing industry changed underneath you. 

So now your income is about $775 a month. I was just doing 

some math and thinking about your own situation with your mom, 

who lived until she was almost 90. So, if you look at your genes, 

you are looking at the realistic prospect of needing enough money 

to get by for more than 20 years. 

Having seen you in Eugene, I know that you have plans and that 

you are out there looking at a variety of ways to increase your income, and you are going to stay at it to get that done. But you are 

also talking to other women who may not be able to fight back in 

as powerful a way as yourself. 

Tell me and the committee a little bit about what you are hearing from those women, women who might be looking at an income 

of well under $1,000 a month, maybe not in a position to fight back 

like you. What are they telling you? 

Ms. PERRIN. Thank you for your support of my experiences. I 

have spoken recently with several women who have expressed to 

me that they do not know how they are going to survive. They do 

not have a clue. You are right. I always have a plan in mind. I am 

always trying to figure things out. That is the way I have survived. 

My daughter even says, ‘‘Mom, I think you should stop trying to 

figure things out. Just let things happen.’’ [Laughter.] But that 

does not work. 

I do not know what they are thinking of doing, and some of them 

have serious health issues which I am very thankful that I do not 

have, and that is scary. With Medicare, they do have care, but that 

means they cannot do the things that would possibly get them 

more income. 

I do not think that a lot of women have any plans to work. They 

are kind of in a state of giving up and hoping that something will 

happen. As I was telling people that I was coming here, they said, 

‘‘Go tell them we need help.’’ So I cannot do anything on my own 

except relay that message that there is a need for women who have 

not been able to put aside enough money or have resources through 

a marriage, or family resources, or something to be able to survive 

in the last couple of decades of their life. 

The CHAIRMAN. So you have been listening over the last half 

hour, 45 minutes to those at the witness table talking about a variVerDate Mar 15 2010 17:26 Jul 01, 2015 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 R:\DOCS\95123.000 TIMD
13 

ety of ideas. Do any of the ideas strike you as appealing and ones 

you think we ought to follow up on? 

Ms. PERRIN. Well, one of the things that I wrote down here— 

which I did not do myself because of the situation I was in—is that 

the delayed claiming seems to be something that there should at 

least be more education about with members of the community, especially through organizations like AARP, to let people know that 

when they are claiming early, just because they can, it is not necessarily in their benefit, and bringing the idea of what might be on 

the table, as you said, for them later would be something, I think, 

that would be helpful, at least education about it. 

I do not know the intricacies—I am sorry—of all of the other possibilities, but I think it is important to be aware that Social Security is never going to be enough to live the way they had been living when they had income, even if it was low. I have given up a 

lot to be able to just live on very, very, very little. I can get by, 

but it is hard. 

The CHAIRMAN. I think most people are going to leave here and 

say there is something out of whack when we cannot figure out a 

better retirement policy to make sure that a woman like yourself, 

with a life expectancy—certainly the prospect of 20 more years— 

cannot have more opportunities for a dignified retirement than 

what we are talking about today. That is the reason why I asked 

the question the way I did. I saw that you were such a fighter, and 

I think you are going to find your way, but I think there are a lot 

of others who, whether it is for physical or other reasons, are not 

going to be able to do it, and I think we have to figure out a better 

course, and that is why we are glad you could be here. 

Senator Hatch? 

Senator HATCH. This is an extremely interesting panel to me. 

Each of you has helped us to maybe understand this a little bit better. 

Ms. Barr, there is a disproportionate number of women receiving 

Social Security benefits who live in poverty. I think that has been 

established. And that is especially so for non-married women, widows, and divorced women as well. Yet, it is also the case that Social 

Security provides auxiliary benefits to spouses, widows, and survivors of retired, disabled, and deceased workers, and women are 

affected by these benefits. 

Now, I wonder if you could provide a summary of those auxiliary 

benefits, including eligibility requirements and benefit amounts, 

and any thoughts you might have on how those benefits could be 

changed to keep women out of poverty in their older ages. 

Ms. BARR. Thank you, Senator Hatch, for that question regarding 

poverty and whether Social Security has provisions that could help 

in those situations, and also the chance to give a little more detail 

on the auxiliary benefits. First of all, on the auxiliary benefits, 

there are very detailed rules, so I am going to try to paint it with 

a broad brush. Where you have the spousal benefit, it is payable 

based on the primary worker’s benefit. So, if you do work, you receive the better of your spouse’s or your own work record history. 

So, that benefit is 50 percent. You can claim it at age 62. 

Then there is the widow’s benefit, payable at age 60 generally. 

Then there is the divorced spouse’s benefit, also payable at 62. If 

14 

you are caring for minor children, you are also allowed a benefit 

that I think also applies to dependent, elderly family members. 

So the American Academy of Actuaries has not done much research on Social Security and poverty. I am hearing from this testimony that that is something we maybe should focus on a little 

more. Just to kind of point you to some ideas, in my testimony on 

page 9, we have some options that address challenges specifically 

faced by women. This would be more for people retiring in the future. I do not know that it can help people who are currently retired. 

The first one is modifying the computation period for benefits. As 

I mentioned, there is a 35-year period that is used in the average 

in determining Social Security benefits. So what one of the options 

is, is to allow credits for childcare so that maybe if you were out 

of the workforce for 5 years, you could earn a credit, and it is yet 

to be determined how the earnings would be credited. So that is 

one option. 

You could also, instead of crediting years, just drop the number 

of years. So, instead of doing an average over 35 years, you might 

do an average over 30 years, although it would raise the average 

earnings that the benefit is based on. There is also an idea of providing maybe a benefit for low earners with long careers, sort of 

a modified minimum—not a minimum that would be payable to everyone, but sort of like Barbara’s situation of being a long-term 

worker at lower-paid earnings. So those are a couple of options. 

Senator HATCH. That will be fine. You did okay. 

We are running out of time. Let me ask Dr. Slavov—and you can 

augment the record in writing if you care to—as some of our research shows, taking the right Social Security benefits at the right 

time can make a huge difference in someone’s retirement standard 

of living. Making a wrong decision can result in significant losses 

in retirement wealth. According to economist Larry Kotlikoff, ‘‘For 

an age 62 couple, there are over 100 million combinations of 

months for each of the two spouses to take retirement benefits, 

spousal benefits, and decide whether or not to file and suspend 

one’s retirement benefits.’’ 

Are you able to give us a sense of the number of claiming options 

that are available in Social Security? What might be the stakes if 

someone made an incorrect choice because the rules seem to be 

very complex? 

Dr. SLAVOV. Yes, so the rules are indeed complex. So for a couple, 

just to kind of simplify it, a claiming strategy would involve choosing a claiming age for each spouse. For two-earner couples, it is 

also possible for one member of the couple to claim spousal benefits 

at their full retirement age then switch to their worker benefit at 

age 70, after letting it grow. So that is a strategy that is not very 

well-known, but it is legal under Social Security Administration 

rules. 

So I did a calculation, and, according to the sort of modeling that 

I have done, at today’s lower real interest rates, a hypothetical twoearner couple born in 1953 and entitled to roughly average benefits 

could gain over $100,000 over their lifetime from optimal delay 

compared to claiming at 62. A hypothetical one-earner couple could 

gain more than $80,000 over their lifetime. 

15 

The CHAIRMAN. Senator Brown? And with a little luck, we can 

get everybody here in. Senator Brown, then we will have Senator 

Stabenow, and Senator Thune has joined us. So proceed. 

Senator BROWN. Thank you, Mr. Chairman. I particularly appreciate that Senator Hatch and Senator Wyden appreciate the theme 

of this hearing. The debate over Social Security should not be how 

much we cut from the program to balance the budget. It should not 

be about raising the retirement age. It should not be about limiting 

benefits. It is all about retirement security. I think our panelists 

illustrate that well. 

We know that Social Security fundamentally is social insurance 

that most working families could not afford to buy on their own. 

That is the reason that President Roosevelt, and Eleanor Roosevelt 

obviously, helped to create this, and were such strong supporters 

of this. We know a number of other facts: for the bottom two 

quintiles of Americans over 65, Social Security benefits are 84 percent of their income. Even in the middle quintile—and I think it 

is important always to look at the middle quintile, meaning half 

the people are doing better, half the people are not—in the middle 

quintile, Social Security represents 65 percent of retirement income. 

So we know about whom we are speaking when we do this, and 

we should keep these numbers in front of us. That is why it is not 

the time to discuss cutting Social Security, whether it is through 

chained CPI, through privatization, through any other way that 

people tend to promote that. 

I am proud to pick up, as a result, where my colleague Senator 

Harkin left off and introduce his legislation in the next Congress, 

The Strengthening Social Security Act. I look forward to a number 

of you joining me in both parties in co-sponsorship of that. 

My question is to you, Dr. Dodd. Under current Social Security 

guidelines—to preface it—we have talked at length about the impact of the wage gap on women. We know what it means for their 

standard of living in their work years. We know the wage gap 

means lower income, less savings, and it means reduced Social Security benefits. That problem may be worse—may and is in many 

cases—for female caregivers. One study said that female caregivers 

risk losing up to $324,000 in wages, Social Security benefits, and 

private pension contributions as a result of leaving the workforce 

or reducing their hours. Unmarried caregivers—because they do 

not have the spousal assistance in retirement—obviously are even 

more vulnerable when they give up their work to be caregivers. 

Talk to me if you would, Dr. Dodd. Under current Social Security’s guidelines, how can a woman who leaves her job, or who 

works fewer hours to care for a dependent family member or 

friend, how can she protect herself against seeing her benefits drop 

as a result? Is it some caregiver credit? Give me thoughts on where 

we go and, under current law, what we can do, and under proposed 

changes, what we should do. 

Dr. DODD. Thank you for the question, Senator Brown. I think 

that you have heard from all of us that the caregiver credits would 

be an important way to protect her Social Security earnings. I do 

not know that there are other solutions to that. 

16 

I think, if we look in the long run, if she is likely, as women are, 

to live more than 20 years after retirement, we could look at boosting, giving a boost to people, both men and women, who live more 

than 20 years after retirement, because their Social Security 

COLAs have not kept up with the inflationary increases of medical 

costs and other costs. The COLAs do not parallel the CPI. 

Senator BROWN. So some CPI adjustment in terms of really reflecting the costs of being 70 or 80 years old versus a CPI based 

on the cost of being a 40-year-old? 

Dr. DODD. As well as a CPI adjustment during the first 20 years 

of collection that is based on what the elderly pay for goods and 

services, not based on what the urban clerical index is. So you can 

give credit for caregiver years, and you can increase the payment 

on a CPI–E for the elderly. Then, if they do live beyond 20 years, 

give them a boost, based again on the fact that their COLAs have 

not kept up with inflation over time. 

Senator BROWN. My understanding, Mr. Chairman, really quickly—and, if you could give a really brief answer—my understanding 

is other high-end OECD countries have something like this; correct? 

Dr. DODD. I believe so. 

Senator BROWN. All right. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. Senator Stabenow? 

Senator STABENOW. Well, thank you very much, Mr. Chairman 

and Ranking Member. This is an incredibly important discussion. 

I have always felt that Social Security was the great American success story. It is income insurance, and it is disability insurance; it 

is life insurance. 

I will never forget people coming in after the Enron crisis, losing 

everything, people from Michigan coming in and saying to me, 

‘‘Thank God for Social Security.’’ That was it. So this is a very, very 

important discussion. 

I feel like what you are really talking about today is, unfortunately, the 1,2,3,4 punch for women. Women in Michigan earn 75 

cents for every dollar a man earns. So, therefore, they are contributing less and are more likely to leave the workforce to care for 

children or parents or other family members. That is two. They are 

more likely to be in a minimum-wage or low-wage job. That is 

three. And finally, on top of all of that, we live longer. So we are 

in a situation—and, Ms. Perrin, you have clearly laid out the challenge for women, and we thank all of you. 

I wanted to ask you about Social Security Disability, because one 

of the things that concerns me is, I am hearing now, periodically, 

these concerns that Disability claims are through the roof. When 

you really look at it, one of the challenges is that more women are 

working, therefore, more women are in a situation where they may 

have a disability on the job. 

Therefore, we see Social Security Disability claims going up, even 

though we know that, in fact, they are hard to qualify for. It is not 

a large amount of money, but more women in the workforce means 

that we are changing the demographics of who is applying for and 

receiving Social Security Disability. So I wonder if, Dr. Dodd, you 

might speak to that, and then if anyone else would want to as well. 

17 

I think this is very important as we go into next year, and we 

look at the three trust fund buckets, and what we need to do to 

really understand a major driver of the pressure on Social Security 

Disability. 

Dr. DODD. Thank you for asking that question, Senator Stabenow. Indeed, in 2013 the report of the Social Security trustees projected that the Disability trust fund would be substantially depleted by 2016, which would mean up to 20-percent across-theboard cuts in Disability pay, and it is a heavy burden in the minds 

of millions of people. I think you mentioned that there are over 11 

million disabled Social Security beneficiaries, workers, and dependents. 

So the time is now to rebalance how that fund is set up and to 

get the revenue flowing into the Disability trust fund. And recommendations have been made to take it out of the Social Security 

trust fund. When you spread it across how large our Social Security 

trust fund is now, it is really a very, very, very small amount. I 

think this is an important time to do that. So thank you. 

Senator STABENOW. Is this not directly related to, as I said, more 

women coming into the workforce? We are putting now more pressure on the Disability part of Social Security because of more 

women in the workforce? 

Dr. DODD. Absolutely. 

Senator STABENOW. Does anyone else want to respond to that 

particular piece? [No response.] 

I know we are going to be faced with that, Mr. Chairman, coming 

up very soon, and I am concerned about that and making sure we 

kind of look at the reasons why. 

I am wondering if anyone would also want to comment about the 

fact that, if we want to deal with the retirement crisis and what 

is happening to women, raising the minimum wage and enforcing 

equal pay laws would go a long way to help with an underlying 

piece of this, in terms of women being able to receive what they 

should by paying more into Social Security. 

Dr. DODD. I am happy to comment on that. 

Senator STABENOW. Dr. Dodd? 

Dr. DODD. The National Committee agrees that raising the minimum wage is a good idea. It lifts all of the boats, but, even though 

women are in a lower lock, it raises our boat as well. It not only 

improves living and working conditions now, but it improves their 

contributions to Social Security and, hence, the income they would 

receive from Social Security, although it will still be unequal to 

men’s. 

Senator STABENOW. Anyone else? [No response.] 

All right. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Stabenow. In order of appearance, it goes Casey, Thune, and Cantwell. And let us see if we 

can get everyone in. We have 10 minutes left on the vote, then 

maybe a 5-minute window. 

So, Senator Casey? 

Senator CASEY. Thank you so much, Mr. Chairman. Thanks for 

having this hearing, and I will be probably under my time. I will 

make sure I am quick. I really appreciate the panel’s testimony. 

This is an issue, I think, that, no matter where you are from, no 

18 

matter what part of the country, what party, what point of view, 

we all have a concern about it. 

I will submit other questions for the record, but I will direct my 

question first to Dr. Dodd. In particular, I noticed that in your testimony, on pages 4, 5, and 6, you have—I think I counted 12—policy proposals. 

I want to focus on page 4, number 4, ‘‘Equalizing Rules for Widows and Disabled Widows,’’ and then, at the bottom of the next 

page, ‘‘Improving Benefits for Adult Children Who Have a Disability.’’ If you could, just kind of walk through the basic problem 

there, and what you hope would be the policy resolution or solution 

to both of those categories of issues. 

Dr. DODD. Thank you for the question. In terms of equalizing 

benefits for widows, the concept is that a widow gets to claim 50 

percent as a surviving spouse. Yet, her costs are not changing other 

than probably her husband’s food and basic needs. The basic costs 

of daily living are still the same, but her income goes down by 50 

percent. 

So the idea is, let us give a bump-up to those, again, single 

women to prevent them from falling into poverty, which they are 

so close to even being on his Social Security retirement. 

Senator CASEY. And also, in the context of an adult child who 

has a disability, can you explain that difficulty? 

Dr. DODD. A surviving adult child? 

Senator CASEY. Correct. 

Dr. DODD. So, a surviving adult child, similarly, adult children 

with disabilities are expensive in general, so that if their benefits 

are to be cut by 50 percent when their single provider dies, it is 

just inadequate to cover the costs of their care. 

Senator CASEY. And finally—and I will end with this—but when 

you set forth your proposals or what you call ‘‘program improvements,’’ I realize every one of them has a level of importance, but 

if you had to choose, and I am not sure whether you outlined them 

in a priority order, are there several on this list that you think are 

more urgent and more in need of early action? Or is it more of a 

collective set of proposals? 

Dr. DODD. We have not prioritized them at this point. They are 

a menu, but I think all of them deserve consideration, and you cannot balance inequity by just taking action on one of them, because 

the system is so complex and because people’s situations are so 

complex. Each one addresses a different kind of inequity. So that 

is why we have been so broad. 

Senator CASEY. I apologize to the other witnesses, but I want to 

give back 1 minute and 20 seconds. 

The CHAIRMAN. Thank you, Senator Casey. 

Chivalry lives. Senator Thune wanted Senator Cantwell to go 

next. 

Senator CANTWELL. Thank you, Mr. Chairman, and thank you 

for this hearing. I know we have a vote going on, so I am going 

to just try to be precise in a few questions. 

I want to be clear: I know my colleague brought up chained CPI 

a little bit, but does chained CPI reflect the realities of inflation for 

many Social Security beneficiaries, Dr. Dodd? 

Dr. DODD. No. 

19 

Senator CANTWELL. So it is really preposterous to say that you 

can do chained CPI and not affect the bottom line of beneficiaries? 

Dr. DODD. Correct. And over time, chained CPI will have an even 

more significant effect, because you will be increasing the cost-ofliving adjustments at a lower rate and enhancing the risk of entering into poverty. 

Senator CANTWELL. I wish we could get on the same page on 

these numbers, because I think there is some mysterious thing that 

has been discussed about chained CPI, like it does not have an impact on existing and future beneficiaries, and it does. 

Second question: I do not feel like we drilled down enough on the 

market basket of goods of seniors, and women particularly. What 

do you think that market basket of goods would be that would 

truly reflect their expenses and costs, that would be a better part 

of a formula? 

I do not know if you know what I am referring to, but I look at 

it and think, for seniors, their biggest cost is obviously medication 

or other healthcare. So here we have this index, but it does not 

really reflect the things they buy. It reflects what the rest of us 

buy. Well, I guarantee you, the difference between what I purchase 

and what my mother purchases is very, very great. 

Dr. DODD. I think you have made an excellent point, which is 

why we wanted to base Social Security on an elderly CPI that 

looked exactly at their market basket and specifically included 

medical costs, copays, prescription drugs, nonprescription drugs. 

The other thing I think that is not in there is, many seniors stop 

driving, and the costs of transportation to go to and from the doctor, or the hospital, or wherever it is they are receiving care, go up. 

Many adult day health programs no longer provide transportation 

and are relying on the individual to pay for it for themselves. So, 

as you said, their expenditures are much different from our expenditures. 

Senator CANTWELL. And so it is just—I do not know. I feel like 

we need to put it on a billboard or something. It is just wrong to 

assume that their CPI is the same as everybody else’s and that 

they are not going to be negatively affected if we do not do something to address it. They are just losing more and more market 

power every year. 

Dr. DODD. Exactly. And coming closer and closer to poverty every 

year. 

Senator CANTWELL. Yes. And well, with a baby-boomer population starting to reach that bracket, we definitely need to deal 

with this, not just for seniors. We definitely need to help seniors 

now, but, for the future, it is going to have an even more significant impact on our budget if a percentage of them do slip into poverty and then are demanding a different level of service and care. 

So, anyway, I thank the chairman very much for this important 

hearing. 

The CHAIRMAN. Thank you, Senator Cantwell. Senator Cantwell, 

as usual, brings us back to drilling down on the numbers. I want 

you all to know what numbers I am taking out of this room, because this has been very constructive. 

Ms. Perrin is a woman who has done everything right—everything right. Through factors beyond her control, she is now, based 

20 

on her genes, looking at the prospects of living 20 more years, and 

her income is now $775 a month. 

Because I know Ms. Perrin, she is going to figure out how to turn 

this around and make more income and deal with it. But I think 

it is very clear that there is a challenge out there, because there 

are going to be many women who are not, for a variety of reasons, 

going to be able to do that. 

So that is our challenge. All of you have been a very, very constructive panel. We are going to tackle these issues in a bipartisan 

kind of fashion. 

With that, the Committee on Finance is adjourned. 

[Whereupon, at 10:45 a.m., the hearing was concluded.] 

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95123.074
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95123.075
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95123.078
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95123.081
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95123.083
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95123.084
101 

Æ 


95123085.eps