Retirement Security: Women Face Challenges in Ensuring Financial Security in Retirement
Published: 2007-10-11T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Women aged 65 and over will account for a growing segment of the U.S. population over the next several decades. Despite increases in women's workforce behavior in the past 65 years, elderly women have persistently high rates of poverty. Thus, it is important to understand the differences between men's and women's retirement income, and how women may fare given future reforms to Social Security and pensions. GAO was asked to examine (1) how women's retirement income compares with men's and the reasons for differences; (2) how certain life events such as divorce, widowhood, and workforce interruptions affect women's retirement income; and (3) the possible effect on women's retirement income of certain changes to Social Security and pensions that seek to mitigate the effects of differences in workforce participation patterns. To address these objectives, GAO reviewed the relevant literature, interviewed academics and other retirement experts, and used a microsimulation model to project future retirement income. GAO provided a draft of this report to the departments of Labor and Treasury, the Internal Revenue Service, and the Social Security Administration. Cognizant agency officials provided technical comments which were incorporated as appropriate. GAO is making no recommendations.
section_title: What GAO Found
paragraphs: In general, women have less retirement income than men, largely because of women's lower labor force attachment and lower earnings, on average. Fewer women than men have income from most major retirement sources, and women have less income from these sources. Women's median Social Security income is 70 percent of men's. Also, fewer women than men have pensions. Among the population age 65 and over who continue to work, women earn just over half of what men earn. Women also have somewhat smaller income than men from assets, such as interest and dividends. Accordingly, rates of poverty among those 65 and over are substantially higher for women than for men. Although their participation has increased substantially in the last century, women still spend fewer years in the labor force than men, and they more often work part-time. Also, women tend to earn less than men, despite increases in their wages over time relative to men. Although work patterns are key in earnings differences, in prior work, we found that even after accounting for behavioral differences such as education or labor force participation, women still earn less than men. Certain life events--including changes in marital status, labor force interruptions, and long-term care needs--can significantly reduce the amount of pension income and Social Security benefits women receive--and leave women with fewer financial resources at retirement than men. Social Security divorced spousal benefits are available only if the marriage lasted at least 10 years. Furthermore, pension benefits are available to a divorced spouse only under certain circumstances. Women's role as primary family caregiver for children and elderly relatives can reduce their career earnings, on which retirement income is based. Because women tend to live longer than men, widowhood and costly long-term care assistance may further reduce their retirement resources. GAO's simulations of some Social Security changes that would compensate for low earnings or time out of the workforce showed that those changes tend to increase benefits for beneficiaries overall, and particularly those in lower income quintiles. Alternatively, changes that focus on shifts in family structure, such as increases in two-earner couples and increased incidence of divorce, tend to increase the benefits of groups targeted by the change, but produce mixed results for others. Some pension changes that have been proposed in the past several years take into account the changing labor force and norms of employer-provided retirement plans; while these changes are gender-neutral, they may provide important new opportunities for women to increase their retirement income. For example, decreased vesting requirements may provide additional pension income to those with intermittent workforce participation who would not qualify for pension benefits under a longer vesting schedule.

section_title: Letter
paragraphs: Over the next 40 years women aged 65 and over will account for a growing  segment of the U.S. population. In 2000, there were about 20 million  women aged 65 and over, more than 7 percent of the U.S. population; by  2050 that number is estimated to grow by nearly 28 million to about 12  percent of the population. Elderly women have persistently high rates of  poverty, and the major source of income for many retired women is Social  Security. However, the Social Security system is affected by the decrease  in the rate of growth of the working age population. Under current law, the  Social Security Trustees project that by 2041 the Social Security Trust  Funds could be insufficient to pay full benefits.
Demographics as well as rising health care costs are profoundly affecting  not only the Social Security system, but also Medicare, private pension and  health benefits, and personal savings in ways that will likely present  serious challenges to ensuring financial security for future retirees and,  ultimately, the economic security of the nation. In recent years, many  proposed reforms of the Social Security system have focused on long-term  solvency and financing issues, many of which could result in decreased  benefits for individuals. Alternatively, some Social Security proposals  developed over the past several decades include elements that seek to  modify the program and address its limitations when applied to  nontraditional-family or earnings structures. These limitations may be due  both to the evolving nature of families and to changes in women’s labor  force participation that have emerged since Social Security’s creation.  These elements often address the needs of two-earner families as well as  retirement benefits after divorce. Additionally, recent and ongoing  changes in employer-sponsored pension plans, most notably the shift from  defined benefit pension plans to defined contribution plans, may  complement changes in workforce patterns, but also place greater  responsibility for prudent savings and investment decisions on workers.  Given the existing differences in men’s and women’s incomes, and the  changes in women’s workforce behavior in the later half of the 20th  century, any future changes to Social Security as well as both proposed  and ongoing changes to employer-provided pensions could have different  impacts on women and men. It is important to understand how each will  fare under various proposals.
You asked us to help clarify what drives the gap in retirement income  between men and women and to provide information on the implications  of different modifications to both Social Security as well as employer- provided pensions. Our objectives were to examine (1) how women’s  retirement income compares with men’s and describe the reasons for  differences; (2) how certain life events such as divorce, widowhood, and  workforce interruptions affect women’s retirement income, as compared  with men’s; and (3) the possible effect on women’s retirement income of  certain changes to Social Security and pensions that seek to mitigate the  effects of differences in workforce participation patterns.
To address these objectives, we reviewed the relevant literature and  federal laws, interviewed academics and other retirement experts, and  used a retirement-income microsimulation model to project women’s  future retirement income. Specifically, we reviewed and summarized  government and academic research on women’s retirement income, life  events, and poverty as well as proposed changes to Social Security and  employer-provided pensions. We used the Policy Simulation Group’s  retirement income microsimulation model to illustrate differences in  benefit levels by differences in workforce attachment and marital status of  a simulated population, born in 1985. We also used the microsimulation  model to project changes in Social Security benefit levels for a sample of  workers at age 70, from the 1950 and 1985 birth cohorts, under a variety of  possible modifications. The results of our analyses reflect outcomes for  individuals in the simulated populations and do not attempt to estimate  outcomes for an actual population. Unlike some of our prior work, rather  than evaluating Social Security reform packages that seek to achieve  sustainable solvency, we evaluated proposed individual changes targeted  to enhance benefits for certain groups. We also used the model to project  changes in pension benefit levels for a sample of workers at age 70, from  the 1985 birth cohort. We used two cohorts in order to identify differences  in the effects of the changes that could be due to variations in labor force  participation across generations. For some of our analyses, we used a  measure of income that adjusts to account for household size and  economies of scale. The adjustment is made by dividing household benefit  levels by a “family equivalence scale.” We did this to facilitate  comparisons between non-married persons and married persons, whose  household income includes income from both spouses that can vary  significantly between them. We also evaluated the effect of modifications  on individual benefit levels. In addition to evaluating changes in benefit  levels resulting from each modification, we assessed changes in a variable  in the model that serves as a proxy for poverty avoidance. Consistent with  our past work on Social Security reform, when simulating benefits we  compared benefits under each reform to two hypothetical benchmark  policy scenarios that would achieve 75-year solvency, one by only  increasing payroll taxes (which simulates “promised benefits”) and the  other by only reducing benefits (which simulates “funded benefits”).  However, unlike prior GAO work, for the purposes of this study, we  evaluated certain specific individual modifications, rather than  comprehensive reform packages. We did this in order to focus on  modifications that account for more recent changes in family structure  and labor force composition. Additionally, to facilitate comparisons across  cohorts, we generally report the effect of each modification in terms of  percent changes in benefit levels. Using such a measure, the outcomes  from each benchmark are largely similar. In the body of the report, in most  cases, we present output from simulations using the “promised benefits”  benchmark. Detailed output from both benchmarks is presented in  appendix II. For this report, we focused on examining the distribution of  benefits and did not assess equity measures. While our simulations provide  estimates of future retirement income, there is a considerable amount of  uncertainty involved with these estimates. Since these estimates could  change significantly, depending on assumptions used and behavioral  responses, they should not be considered predictions.
We conducted our work between January 2006 and August 2007 in  accordance with generally accepted government auditing standards. A  more detailed discussion of our scope and methodology appears in  appendix I.
subsections: section_title: Background
paragraphs: The retirement outlook for both men and women in the United States has  changed significantly in the last 30 years. Like many industrialized  countries, the United States is undergoing a significant demographic shift  toward an aging population and is experiencing the increased pressures on  the social insurance, medical, and private pension systems that this shift  creates.
While life expectancy in the United States has steadily increased over the  last 50 years, birthrates have declined, and both have led to rapid growth  in the proportion of the population comprised of elderly people: in 1950,  those aged 65 or older made up 8 percent of the population; in 2000, this  proportion rose to 12 percent and is projected to rise to almost 20 percent  by 2030. Also, between 1940 and 1980, women’s life expectancy generally  increased faster than men’s. During the same time period, the difference in  life expectancy at age 65 for women and men grew from 1.5 years in 1940  to 4.4 years in 1980. (See fig. 1.)
The difference in men’s and women’s longevity has decreased over the  past 25 years, and that difference is expected to remain stable throughout  much of the 21st century. Nevertheless, the ratio of elderly women to  elderly men increased substantially in the post-World War II era, and  elderly women will continue to outnumber elderly men both in numbers  and as a percent of the population for the foreseeable future. (See fig. 2.)  As a result of these trends, women can expect on average to spend more  years in retirement than men.
Traditionally, the financial resources that provide retirement security have  been characterized as a three-legged stool: Social Security, pensions, and  savings, although increasingly, earnings are also a significant source of  income for the elderly. Overall, women have been more likely than men to  rely on Social Security to finance their retirement. Moreover, some aspects  of the Social Security system particularly benefit women. For instance,  because women tend to have lower lifetime taxable earnings than men,  they benefit from the Social Security system’s progressive benefit formula,  which replaces a larger portion of lifetime earnings for people with low  earnings than for people with high earnings. In addition, Social Security is  designed specifically to accommodate both low- or non-earning spouses,  often women, by providing them with a dependent benefit based upon  their spouses’ earnings. Social Security was created based upon the model  of a single-earner married couple family structure, and while many women  still never enter the paid workforce or choose to reduce their workforce  participation, at least in part to care for children or other family members,  the single-earner family model no longer describes the typical American  household. Nevertheless, this structure has been and continues to be  extremely beneficial to some women.
However, Social Security faces a long-term financing shortfall resulting  largely from longer life spans and lower birthrates. According to 2007  Social Security projections, absent policy changes, Social Security tax  revenue is expected to fall short of benefit payments for the first time in  2017; by 2041 the system may have inadequate resources to pay full  benefits. As a result, in the future, Social Security’s role could change.  Reductions in scheduled benefits and/or increases in program revenues  will be needed to restore the long-term solvency and sustainability of the  program. Within the program’s current structure, possible benefit changes  might include changes to the benefit formula or reductions in cost-of-living  increases, among other options; revenue increases might include increases  in payroll taxes or transfers from the Treasury’s general fund. In addition,  many proposals have been put forth over the past several decades to  address the adequacy of Social Security benefits for different kinds of  workers and their families. These proposals often address the needs of  spouses, survivors, and low earners as well as those with significant  workforce interruptions.
Additionally, many workers bear greater risk and responsibility for their  retirement savings than in the past. About half of U.S. workers do not have  a pension plan through their employer, and those who do are less likely  than in the past to be covered by defined benefit (DB) plans. Among those  who offer plans, employers have increasingly shifted from traditional DB  to defined contribution (DC) plans, such as 401(k)s, which are based on  contributions to and investment returns on individuals’ accounts. While  private sector DB plans must offer a guaranteed lifetime income in the  form of an annuity, DC plans more often provide the beneficiary with a  lump sum as the only option. While individuals could take the proceeds  of their lump sum and purchase an annuity, the cost of purchasing a  private annuity may make this option unattractive to many households. In  addition, the private equity market charges women a higher premium for a  life annuity than it charges men of the same age, because on average  women live longer than men.
Personal savings have traditionally been an important source of retirement  income. Unfortunately, despite the challenges facing both public and  private benefit systems for the elderly, relatively few Americans are  currently saving, and some research suggests that women have less in  savings than men. According to some measures, America has the lowest  overall saving rate of any major industrialized nation. The U.S personal  saving rate as a percentage of disposable personal income has recently  reached levels not seen since the Great Depression, falling below 1 percent  in 2005 and 2006. A variety of proposals seeking to encourage more  individuals to save have been introduced in the past several years. Many of  these proposals target low- and moderate-income workers who are least  likely to have access to employer-sponsored pension plans. Some of these  proposals create added incentives or ease access for individuals to save  through existing savings vehicles, such as 401(k) plans or individual  retirement accounts (IRA). Other plans would create new vehicles for  savings, such as 401(k) type plans for those not currently covered by a  plan. One mechanism that already exists to encourage individuals to save  is the so-called spousal IRA offered to non-earning spouses, who are most  often women, as a way to build retirement income. A spousal IRA, allows  non-earning spouses to accumulate retirement savings in their own  retirement accounts.
Finally, health care coverage and rising health costs have added to the  financial burden for retirees. Retired Americans often rely on employer- sponsored health benefits to provide health coverage until they become  eligible for Medicare or to supplement their Medicare coverage. In 2005  about 37 percent of retirees were covered by such plans. However,  retirees are paying more for these benefits, and the number of private  employers offering them has declined considerably. The rate of growth of  health care costs has generally outpaced the rate of U.S. economic growth,  and this trend is likely to continue, jeopardizing the availability of  employer-sponsored insurance for many. Rapidly rising health care costs  may be particularly burdensome for retirees with limited financial  resources. Additionally, the odds of having a disability or chronic illness  increase with age; since, on average, women live longer, dealing with the  cost of declining health may be a particular concern for women.
section_title: Women Have Less Retirement Income than Men Largely because of Differences in Labor Force Participation and Lifetime Earnings
paragraphs: Generally, women have less retirement income than men, largely because,  on average, women have lower labor force attachment and lower earnings  than men. While about 90 percent of men and women aged 65 and older  receive Social Security benefits, fewer women than men have income from  most other major sources of retirement income, and they receive less  than men from those sources, according to a Congressional Research  Service analysis of Census Bureau data. Additionally, women aged 65 and  older have higher rates of poverty than men of the same age. While  women’s labor force participation has increased substantially in the last  half century, it has flattened out in recent years and remains more  intermittent than men’s. Women also tend to earn less than men during  their working years.
subsections: section_title: Women Have Less in Total Retirement Income than Men
paragraphs: While Social Security provides retirement income to almost 90 percent of  all elderly people, a smaller percentage of women than men age 65 and  older have additional income from pensions, assets—such as interest or  dividends from lifetime savings, or earnings, according to the  Congressional Research Service analysis of Census Bureau data. For  example, in 2004, the percentage of men with income from pensions was  almost twice that of women and 44 percent more men than women had  wage and salary income. (See fig. 3.)
Moreover, women’s median incomes from each of the various retirement  sources are lower than men’s. As shown in figure 4, men’s median annual  Social Security income was $12,583 in 2004, while women’s was $8,799.  Nevertheless, Social Security is an important financial resource for  women, many of whom receive spousal, divorced spousal, or survivor  benefits. According to the Social Security Administration (SSA), while  Social Security is the largest single source of income for most of the  elderly population age 65 and older, it represents 53 percent of total  income for elderly unmarried women—including divorced, widowed, and  never married women, compared to 38 percent for unmarried men.  Moreover, Social Security was nearly the only source of income for close  to half of all elderly unmarried women who received it in 2004, compared  to a little more than a third of elderly unmarried men. Importantly, Social  Security can become a growing fraction of total retirement income over  time since it is indexed to offset the effects of inflation. In contrast, private  pensions and income from assets are rarely indexed. Unlike Social  Security, pension income may end upon the death of the spouse if the  retired worker elects to receive a single life annuity, in which payments  cease at the time of the worker’s death.
The difference between men’s and women’s pension income is larger than  for Social Security. In 2004, men’s median pension income was nearly  twice women’s, $12,000 and $6,141, respectively. Asset income is relatively  low for both women and men compared to Social Security and pensions.  Nevertheless, women’s median asset income was $750, while men’s was  slightly higher at $964. Finally, while less than a fifth of the elderly had  wage and salary earnings in 2004, men’s median earnings were $20,800,  while women’s were $12,000. (See fig. 4.)
Additionally, rates of poverty among those 65 and over are higher for  women than for men. Over time, overall poverty rates among the elderly  have declined from 35 percent in 1959 to 10 percent in 2005, according to  Census Bureau data. This is in part due to Social Security benefits for the  aged. Here, too, gender differences remain. In 2004, 12 percent of women  and 7 percent of men age 65 and older had incomes below the federal  poverty level, with more pronounced variation among individuals of  different marital status. For example, never-married elderly men and  women had the highest rates of poverty, while the next highest rates were  among divorced and widowed elderly women. Married couples had  significantly lower rates than all other marital statuses. (See fig. 5.)  Moreover, almost 21 percent of women age 65 and older who lived alone  were poor, in comparison to almost 15 percent of men who lived alone.
section_title: Women Have More Intermittent Work Histories and Lower Earnings than Men
paragraphs: Women’s labor force participation increased substantially in the latter half  of the 20th century, although women continue to work fewer total years  than men and more often work part-time. While women’s participation in  the labor force increased from the mid-1960s through the late 1990s, men’s  labor force participation has steadily decreased, most significantly  between the mid-1950s and the early-1970s. (See fig. 6.)
Much of the change in women’s participation rates is due to higher labor  force participation rates among married women. According to Census  Bureau statistics, between 1960 and 1995 married women’s labor force  participation increased from almost 32 to 61 percent and has not changed  significantly in the past decade. As a result, there are now more married  couple households with two earners than when Social Security was first  established. These overall trends have recently stabilized, and in 2006 the  Bureau of Labor Statistics predicted that women’s labor force  participation rate will not change significantly in the near future.
Despite the overall increases in women’s labor force participation, women  continue to have more intermittent labor force participation than men. As  we reported in 2003, women have fewer years of work experience, work  fewer hours per year, are less likely to work a full-time schedule, and leave  the labor force for longer periods of time than men. For example, 25  percent of women and almost 11 percent of men age 16 and older usually  worked part-time in 2005.
In addition to their spending less time in the workforce overall, women  earn less than men when they are working. Although women’s earnings  have risen relative to men’s over time, women nevertheless continue to  earn less than men. According to Census Bureau data, in 2005, women  earned 77 percent of what men earned for full-time, year-round work. (See  fig. 7.)
This difference may be due, in part, to the fact that women continue to  take primary responsibility for family care and those who work outside the  home may trade some career advancement for schedule flexibility. In fact,  in prior work we found that work patterns are a key factor in explaining  the differences in men’s and women’s earnings. However, even after  accounting for these and other behavioral factors—such as educational  attainment—unexplained differences remained.
Changes in women’s labor force participation have also increased their  participation in employer-provided pension plans, according to one  study, though, as noted earlier, their overall rates of participation are still  lower than men’s. Women who worked full-time throughout the year  actually had higher pension participation rates than men with similar work  schedules in 2005, but women’s overall rates remain lower because, in  part, of their lower rate of full-time work and lower earnings, according to  the Employee Benefit Research Institute. While the increase suggests that  a larger share of women in younger cohorts will likely qualify for pensions  based on their own earnings, many women may continue to receive  spousal or survivor benefits through their husbands’ pensions. In addition,  the general shift from DB to DC plans may have both positive and negative  consequences for women. Women may especially benefit from the greater  portability afforded by DC plans because of their more intermittent labor  force participation. However, another consequence of this general shift is  that with many DC plans, individuals have a greater responsibility to make  prudent investment decisions and to make their retirement savings last  over their lifetimes, which for women, on average, are longer than for  men.
Changes in women’s labor force participation have also increased the  percentage of women who are insured under Social Security based on  their own work history, even though many women continue to receive  dependent benefits as spouses. According to SSA, women who were  eligible to receive benefits based on their own work records increased  from 22 percent to 84 percent between 1950 and 2006. Nevertheless, in  December of 2005, approximately 60 percent of retired women received  Social Security benefits based, at least in part, on their marital history.  Moreover, nearly all spousal and survivor beneficiaries were women in  2005. Further, as women’s labor force participation increases, many will  find that benefits based on their own work records are more generous  than the spousal benefit. However, when many of these same women  become widows, they will likely begin to collect benefits based on their  marital status, as the survivor’s benefit, at 100 percent of their deceased  spouse’s benefit, is likely to be greater than their own.
Data on current retirees reflect the fact that those retirees comprise older  generations of workers, in which women’s labor force participation rates  were lower than those of current workers. In the future, data that include  later generations of women, with greater labor force participation rates,  may show greater percentages of women eligible for and collecting  benefits based on their own work records. Nevertheless, the key factor  contributing to the difference in men’s and women’s Social Security  income levels will continue to be the difference in their lifetime work  histories and earnings. Women’s continued intermittent labor force  participation and lower median earnings than men’s result in lower benefit  amounts, even though Social Security replaces a greater percentage of  preretirement earnings for lower-wage workers.
section_title: Certain Life Events May Reduce Women’s Retirement Resources More Than Men’s
paragraphs: Certain life events— including changes in marital status, labor force  interruptions, and long-term care needs— can significantly reduce the  amount of pension income and Social Security benefits for both men and  women. However, because of women’s lower earnings and labor force  participation, these events may exacerbate the deficiency of women’s  financial resources in retirement. Divorce often results in economic loss  for both men and women, but women tend to experience more economic  loss than men. In addition, women are most often the family members who  provide unpaid care, which can reduce their career earnings as well. The  death of a spouse can also reduce retirement income for the survivor, and  because they generally live longer, women have higher rates of  widowhood than men at older ages. While declining health at older ages  has significant implications for both men’s and women’s financial security,  because of life expectancy differences, women more often require costly  long-term care assistance.
subsections: section_title: Divorce May Reduce Women’s Retirement Income
paragraphs: Research has shown that married couples generally have greater  household wealth than nonmarried men and women and that marital  disruption negatively affects both men’s and women’s economic statuses.  While divorce may result in a reduced standard of living for both men and  women, divorced women, as a group, experience more economic loss than  divorced men. For example, the Census Bureau reported that in 2001, 23  percent of recently divorced women, in comparison to nearly 8 percent of  recently divorced men, had income below the poverty level. One study  found that marital disruption, including divorce, resulted in a substantial  drop in women’s income and loss of assets. Another study projected in  2000 that most divorced women are more likely than never-married,  married, and widowed women to be in the bottom 40 percent of the  income distribution at age 67. As shown in figure 5, elderly divorced  women have higher rates of poverty, at over 20 percent, than elderly  divorced men, at 12 percent.
In retirement, divorce has the potential to reduce Social Security benefits  because Social Security’s eligibility rules require that the marriage last at  least 10 years for a divorced spouse to claim benefits from an ex-spouse’s  earnings record. However, Census Bureau data from 2001 show that more  than half of first and second marriages that ended in divorce lasted less  than 10 years.
Unlike Social Security benefits, divorced spouses can, under certain  circumstances, receive all or part of their former spouses’ private pension  benefits, regardless of the marriage’s duration. Although the Employee  Retirement Income Security Act of 1974 (ERISA) generally does not  allow workers to assign their benefits to another person in this way,  Congress amended the law in 1984 through the Retirement Equity Act  (REA) to permit the payment of pension benefits to a worker’s former  spouse under a qualified domestic relations order (QDRO). A QDRO,  which meets certain statutory requirements, including approval by a court  and the plan administrator, may be used to satisfy certain obligations, such  as child support, alimony, or the division of marital property. However,  the worker’s pension benefits may be reduced. Additionally, women often  forgo the protection provided by QDRO’s. This may happen for a variety of  reasons, in some cases women may be unaware that their spouses are  covered by a pension, while others may not know that they can receive  benefits while their spouses are alive.
section_title: Family Caregiving, Which Can Reduce Lifetime Earnings, Is More Common for Women Than for Men
paragraphs: Family caregiving, which encompasses important child care and elder care  responsibilities, is more often provided by women. In order to meet these  family needs, some caregivers reduce work hours or leave the labor force  altogether. For example, one Census Bureau study shows that 45 percent  of women who worked during pregnancy with their first child between  1996 and 2000 took unpaid leave and one-quarter quit their job. Bureau of  Labor Statistics data indicate that, among parents with children under age  6, almost 92 percent of fathers, compared to over 58 percent of mothers,  were employed in 2005. Research shows that in addition to caring for  children, women provide unpaid care for a family member or friend more  often than men. In 2002, daughters or daughters-in-law provided care to  frail, older adults living in the community more often than sons or sons-in- law, according to one study. Similarly, another study found that  employed women were more likely than employed men to provide care for  a child, spouse, or partner with a disability. Finally, one study reported  that wives tend to reduce their work hours when a husband experiences a  severe health shock, such as a stroke.
Caregiving can negatively affect the provider’s career earnings and,  consequently, retirement income. Although many caregivers are employed,  research shows that caregivers can experience substantial losses in career  development and workforce earnings as well as significant out-of-pocket  expenses. For example, one study showed that women age 46 and older  who began caregiving for elderly relatives between 1987 and 1992  experienced an average of over $3,000 loss in annual earnings. Another  study showed that over half of caregivers who worked while providing  care reported that this role required them to adjust their work schedules,  such as arriving late, or even quit work. Furthermore, years spent out of  the paid labor force can reduce a worker’s Social Security benefit amount.  Moreover, one study found that caregiving for adult parents can raise  women’s risk of poverty in later years.
section_title: Women Are More Likely to Experience Widowhood, Which Puts Them at Risk for Poverty
paragraphs: Older women are several times more likely than older men to experience  widowhood. For example, in 2004 women age 65 and older were as likely  to be widowed as married, while men were 5.5 times more likely to be  married than widowed. (See fig. 8.)
Despite changes to the Social Security system in the 1970s that improved  widows’ financial outcomes, research shows that widows continue to be at  risk for poverty in old age. As noted earlier, widows age 65 and older had  over three times the poverty rate of married women or men in 2004.  Widowhood may cause Social Security and pension income to decrease at  the household level, which can be a hardship if certain fixed costs, such as  housing, remain the same. More specifically, household Social Security  income is reduced by one-third if the couple’s benefits had been based on  one spouse’s work history and by up to 50 percent if both spouses had  been receiving retired worker benefits. In addition, pension income is  likely to be reduced for the surviving spouse.
The REA helped protect spouses and widows by requiring employers to  obtain a spouse’s written consent in order for a worker to decline the joint  and survivor annuity default option. A common default for the joint and  survivor annuity provides a 50 percent benefit level to the surviving  spouse. However, the shift from DB pension plans to DC pension plans has  the potential to provide even less income security for widows who rely on  a spouse’s pension income. Although DC plans generally must provide that  an employee’s vested account balance is payable in full on death to the  surviving spouse, the employee may, during his or her lifetime, make  withdrawals from the account or roll over the balance into an IRA without  spousal consent.
section_title: Health Care Costs May Deplete Elderly Women’s Retirement Resources
paragraphs: Declining health at older ages has significant implications for women’s  financial security. At least in part because women have longer average life  spans than men, women are more likely than men to become disabled and  need long-term care as they age. In 2003, among Medicare enrollees age 65  and older, more women than men reported an inability to perform at least  one of five certain physical functions, such as the ability to walk two to  three blocks. Women are significantly more likely than men to develop  severe disabilities, and one study estimated that women age 65 have a 44  percent chance of entering a nursing home, compared to 27 percent for  men. Women represented 72 percent of all nursing home residents in  1999 and 70 percent of home care consumers in 2000. Research shows  that nursing home entry has important financial consequences for the  elderly, especially for unmarried women. In 2006, Genworth Financial  estimated that the average annual cost for nursing home care was $70,912  and for assisted living facilities, $32,294. In addition, out-of-pocket  medical costs during the last years of a spouse’s life can deplete the  couple’s resources substantially and contribute to poverty among  surviving spouses, who are most often widows.
section_title: Specific Changes to Social Security and Employer-Sponsored Pensions Will Affect Women Differently than Men Because of Differences in Lifetime Work Histories
paragraphs: The specific changes to Social Security and pensions that we modeled had  different effects on women and men, and among different subgroups of  women, because of differences in lifetime work histories. Some of the  proposed modifications to Social Security that we analyzed are in fact  designed to increase the benefits of targeted groups by accounting for  differences in workforce participation patterns. On one hand, our model  results showed that modifications that compensate for low earnings or  time spent out of the workforce for caregiving tend to increase benefits for  beneficiaries overall, and particularly those in lower income quintiles. On  the other hand, our results showed that modifications that focus on  changes in family structure, such as more two-earner couples and an  increased incidence of divorce, tend to increase the benefits of groups  targeted by the change, but produce mixed results for others. A number of  pension modifications proposed in the last several years take into account  changes in the labor force and the changing norms of employer-provided  retirement plans; while these reforms are gender-neutral, they may provide  important new opportunities for women to increase their retirement  income.
While the costs associated with each of the Social Security program  modifications modeled in this report vary, all but one would have a  negative effect on trust fund solvency regardless of the benchmark used.  Because we have analyzed each modification in isolation, we present the  solvency impact for each modification in isolation; as part of a larger  package of reforms, the solvency impact of each change may vary. For a  summary of the solvency impact of each simulated change under both the  “promised benefits” and “funded benefits” benchmarks, see appendix IV.  For more information on both the “promised benefits” and the “funded  benefits” benchmark, see appendix I.
subsections: section_title: System Modifications Designed to Increase Social Security Benefits for Specific Populations Do So, but Sometimes Only Marginally
paragraphs: Using the Policy Simulation Group’s GEMINI and SSASIM models, we  assessed the effects of certain specific modifications that were designed to  enhance Social Security benefits for specific subgroups of beneficiaries at  age 70. We used both a family equivalence scale and individual level  analysis to be able to both compare between married and unmarried  individuals and to assess the impact of modifications on individuals alone.  Each of the changes discussed below increases benefits for the targeted  group, but the size of the increase projected varies with the number of  people affected; generally, the smaller the population that was targeted by  the reform, the larger the change in benefits and vice versa. While some of  the individual modifications modeled below have no benefit impact  outside of the targeted group, for those that do have broader effects, the  impact on other beneficiaries can vary. The results of our analyses reflect  outcomes for individuals in the simulated populations and do not attempt  to estimate outcomes for an actual population.
section_title: Implement Dependent Care Credits
paragraphs: Dependent care credit proposals seek to compensate those who spend  some years out of the workforce to care for dependents or those with low  or reduced earnings while attending to caregiving responsibilities. Fewer  years in the workforce or reduced earnings during caregiving years tend to  lower a caregiver’s average lifetime earnings and, thus, his or her Social  Security benefit levels in retirement. Many advocates have proposed  dependent care proposals that either modify Social Security’s traditional  benefit formula, which uses a 35-year span of time to average lifetime  earnings or credit caregivers with additional earnings. These proposals  vary in design and do not necessarily produce similar results. Either  option would require data collection and computation beyond SSA’s  current practices, a potential administrative complication.
Specified earnings credit: This approach would assign to the  caregiver one half of average earnings for each year in which there was  a child in care and the actual earning was zero or reduced from prior  earnings for a fixed number of years. Those who already earn the credit  amount would not benefit. Research has shown that a caregiver credit  model based on crediting earnings does a better job of targeting lower  earners than excluding care years from earning averages.
Excluding care years from earning averages: This approach would  reduce the standard 35-year basis for determining a worker’s average  indexed monthly earnings by subtracting the number of years spent  providing care. It generally also specifies a limit for the number of  years that can be dropped from the calculation of average earnings.  Because the design specifies years of zero earnings, this approach may  not target financially needy populations who lack sufficient resources  to take full years off from work. High-income caregivers may be more  likely to benefit from such an approach if economic necessity drives  low-income caregivers back to the workforce, while those in high- income families are able to stay out of the workforce longer.
subsections: section_title: GAO Simulation of a Dependent Care Credit
paragraphs: We simulated the effect of a dependent care credit similar to one evaluated  by the Urban Institute that would credit a worker’s earnings record with  one-half of average wages in years in which there was a child under 5  years of age in the household and the worker’s earnings were less than  one half of average wages. We evaluated the impact on the Social  Security benefits of two simulated populations—one cohort born in 1950  and another born in 1985.
Using the GEMINI model, we found that this particular dependent care  credit resulted in positive median benefit changes for both women and  men, though it provided a larger increase in median benefits for women.  The credit was more beneficial for those born in 1950 than in 1985. As  shown in table 1, its outcome was progressive for those affected by the  change, with women in the lowest earnings quintile showing the highest  proportionate gain in their Social Security benefits. In both cohorts, never- married women had the largest median change in benefits. The effect of  this change was also broad; for both birth cohorts, it affected the largest  number of beneficiaries, both men and women, of any of our simulations.
section_title: Increase Minimum Benefit
paragraphs: Minimum benefit proposals aim to ensure Social Security benefit adequacy  for low earners. Under current law, Social Security includes a Special  Primary Insurance Amount (also referred to as the Special Minimum  Benefit) intended to reduce poverty among retired lifetime low-wage  workers. The Special Primary Insurance Amount targets retirees with a  low benefit based on a steady, long-time, low wage work record, rather  than on those with a low benefit based on intermittent workforce  attachment; the Special Primary Insurance Amount makes this distinction  by basing the calculation on years worked rather than earnings level. Very  few people currently receive benefits based on the Special Primary  Insurance Amount; however, the majority of those who do are women.  Additionally, the benefit provided by the Special Primary Insurance  Amount is less than the official poverty level for aged persons, and  because the benefit is indexed to price inflation rather than wage growth,  it has provided a less generous benefit over time relative to the traditional  wage-indexed Social Security benefit. Because of this, SSA has projected  that the Special Primary Insurance Amount will phase out as early as 2013.  A newly designed minimum benefit could expand benefits for low earners  across all demographic groups, including women, who are more likely  than men to be at the bottom of the income distribution. Expanded  minimum benefits may also be of renewed importance to benefit adequacy  as part of a broad Social Security reform scenario that reduces benefits for  all beneficiaries, including low earners.
Several Social Security reform proposals include a new minimum benefit  that would guarantee a benefit equal to a set percentage of the poverty  level, dependent on the number of years worked across a lifetime. For  example, Estimated OASDI Financial Effects of the “Bipartisan Retirement  Security Act of 2005”—legislation introduced as H.R. 440 by  Representative Jim Kolbe and Representative Allen Boyd would provide  low earners who had 40 years of minimum wage earnings a benefit equal  to 120 percent of the federal poverty level when fully phased in.
subsections: section_title: GAO Simulation of an Increased Minimum Benefit
paragraphs: To simulate the effect of an increased minimum benefit, we modeled a  change to set a minimum benefit of 120 percent of the federal poverty level  for 30-year workers, linearly phased to zero for workers with 20 years or  less of covered employment. Slightly fewer men than women in the  simulation were affected by the change, and those who were had a slightly  lower median benefit changes than women affected by the change. As  expected, the outcome of this change was largely progressive. In both  cohorts, a larger share of women in the lower two income quintiles had  benefit changes resulting from this modification than women in the upper  three income quintiles. Moreover, the median percentage changes in  benefits for women in the bottom quintile was much larger than those for  women in the higher quintiles. (See table 3.)
While the share of women affected by the minimum benefit was fairly  similar across marital statuses (never-married, divorced, married and  widowed) in each cohort (for data, see app. II, table 30), never-married  and divorced women had much larger percent changes in median benefits.  For never married women affected by the modification, the percent  change in median benefits was more than double under the minimum  benefit than under any other modification.
The impact of the minimum benefit is larger in the 1950 cohort versus the  1985 cohort because the minimum benefit is linked to the poverty line,  which is indexed to prices, while Social Security initial benefits are  indexed to wages; over time, this results in a lower minimum benefit  relative to Social Security benefits. This effect could be reduced by  indexing the poverty level to wages rather than prices, as was done in the  Kolbe-Boyd proposal.
A minimum benefit following parameters such as we simulated may  increase benefits for both part-time and full-time workers. Because Social  Security only tracks annual earnings rather than wages or hours worked, a  higher-earning, part-time worker could receive the same benefit as a full- year, low-income worker; enhanced benefits may therefore also be  provided to individuals who work part-time by choice.
section_title: Increase Survivor Benefits
paragraphs: One way that some proposals address the vulnerability of widows or  widowers to poverty is by raising survivor benefits to a set percentage of a  married couple’s prior combined benefit (for example, two-thirds or three- fourths of the level of benefits received by the couple while both were  living). Under current law, a survivor receives the larger of his or her own  benefit or the benefit of the deceased spouse. Thus, survivor benefits for  many dually entitled women or women receiving only spousal benefits  would replace approximately 67 percent of the couple’s prior total benefit  level. Researchers have expressed concern about whether this decline in  total household benefits is too large to maintain the survivor’s previous  standard of living. On the other hand, for survivors of two-earner couples  where both spouses received retired worker benefits on their own record,  a widow’s benefit under current law may range between 50 percent and 67  percent of the couple’s prior total benefits upon the death of a spouse,  causing an even greater decline in total household benefit income.
subsections: section_title: GAO Simulation of an Increased Survivor Benefit
paragraphs: GAO modeled a survivor benefit that would provide a surviving spouse  with the higher of 75 percent of the couple’s previous combined benefit  level, capped at the average benefit level for all new retirees, or the  current law survivor benefit. We did not simulate the effect of the current  provision ensuring surviving spouses a minimum of 82.5 percent of the  deceased worker’s PIA; had this been included, results may be slightly  higher. This simulation resulted in increased benefits for both men and  women. (See table 5.) While about three times the number of women as  men were affected, the magnitude of the benefit change was larger for  men who were affected by the program modification; their median  percentage change in benefits was nearly 29 percent in both cohorts. This  is attributable to the increased survivor benefit modification compared to  current law. Current law allows survivors the greater of their own benefit  or their spouse’s benefit. As most men receive a larger benefit than their  spouses, a survivor benefit of the larger of 75 percent of the couple’s  combined benefit (capped at the average benefit level for all new retirees)  or the husband’s benefit would provide a higher benefit level than current  law to lower-earning men who outlive their wives.
In both the 1985 and 1950 cohorts, the increased survivor benefit  modification increased the number of women who never fell below the  microsimulation model’s low benefit threshold by about 6 percentage  points versus current law. For those women affected by the benefit in our  simulation, the median percentage change in benefits was about 16  percent in the 1950 cohort and about 18 percent in the 1985 cohort. As  expected, for both cohorts, the majority of women with benefit changes  resulting from this change are widows and divorced women. Additionally,  in terms of number of people affected, the impacts of this change were  concentrated primarily in the bottom two income quintiles.
By capping this program modification at the level of average benefits, this  modification targets the increased survivor’s benefit to lower-earning  widows and widowers. Although exempting wealthier beneficiaries from  this benefit enhancement creates fiscal savings, it may limit many  survivors from two-earner couples from benefiting from the change.
section_title: Reduce Spousal Benefits and Increase Survivor Benefits
paragraphs: An increase in survivor benefits is sometimes paired with a decrease in  spousal benefits, from one-half the retired worker’s benefit to one-third.  This pairing provides nearly the same average percentage change in  benefits to widows as the modification above, but contains costs by  reducing the spousal benefit while the worker is still living.
subsections: section_title: GAO Simulation of a Reduction in Spousal Benefits with Increased Survivor Benefits
paragraphs: Our simulation of this modification resulted in nearly the same benefit  changes for widows as the “Increase survivor benefits” projection  described above, while the benefits of affected married women and  divorced women—recipients of spousal benefits—had a generally negative  change. When all women affected by this modification are sorted into  quintiles by lifetime household income, the median percentage change in  benefit levels is similar across quintiles, and is in all cases negative. (See  table 7.) Despite this, the low benefit avoidance rates were quite similar to  those produced by the survivor benefit increase modification for all  cohorts, indicating that both modifications have nearly the same positive  impact on our proxy for poverty avoidance (see app. III).
This proposal would both smooth household benefit levels before and  after widowhood and provide savings to the Social Security system to  offset costs of the increased survivor benefit.
section_title: Reduce Duration of Marriage Requirement for Divorced Spouse Benefit Eligibility
paragraphs: Proposals to shorten the current requirement for 10-year marriage  duration to be eligible for divorced spouse and survivor benefits would  expand eligibility for benefits to divorced spouses from marriages that do  not meet the 10-year milestone. Timing of divorce can have a large impact  on retirement benefits, as an individual divorced one day before the 10  year anniversary would not be eligible for benefits, while another  individual who waited one more day would be eligible for a full spousal or  survivor benefit. Reducing the 10-year marriage requirement would make  more divorced individuals eligible for divorced spouse and survivor  benefits but would also increase the probability that an individual with  several former spouses could have several spouses receive benefits on one  worker’s earnings record.
subsections: section_title: GAO Simulation of a Reduced Marriage Requirement
paragraphs: GAO simulated a modification that would reduce the duration of marriage  requirement for receiving divorced spouse benefits from 10 to 7 years. In  the 1950 and 1985 cohorts, among women who had a benefit change due to  the reduced marriage requirement, the median percentage change in  benefits was about 65 percent and 45 percent respectively (see table 9),  the largest median change in benefits for women among all reforms  modeled. The scope of impact, however, was extremely small: In both  cohorts, those affected made up less than 1 percent of the model sample.
The changes in this simulation also resulted in a handful of newly eligible  beneficiaries: In the 1950 cohort, three individuals who were not  previously eligible for Social Security benefits became eligible under the  reform scenario, and in the 1985 cohort, 43 individuals became eligible.  Among the seven simulations that we ran, this was the only one that  resulted in new beneficiaries. This is because individuals who were not  eligible on their record became eligible as spouses or survivors under the  shorter duration of marriage requirement. These newly eligible  beneficiaries are not included in the median percent change measures.
section_title: Pension Modifications That Address the Changing Pension Landscape and Changing Workforce Patterns May Serve Women Better than Traditional Pension Models
paragraphs: In addition to the Social Security proposal elements above, we simulated  two pension modifications that address challenges related to the shift to  DC plans and changing workforce patterns. Both modifications modeled  by GAO generally resulted in higher pension benefits, and address issues  that may be of particular concern to women. In particular, in DC plans,  contributing early and maintaining an account over time has a significant  positive impact on the balance of that account and the resulting retirement  benefit. Decreasing vesting requirements would allow workers who  change jobs more frequently to attain increased benefits from pension  plans. Automatically rolling over accounts at a job’s end increases the  probability that accrued retirement balances will in fact be saved for  retirement. The GEMINI/PENSIM models do not account for behavioral  responses to program changes; therefore, data do not take into account  possible employer or employee responses to the program modifications  below.
section_title: Lowering Vesting Requirements
paragraphs: Under current law, eligible employees must be allowed to participate in a  plan as of age 21 and after completing 1 year of service, subject to certain  exceptions. An employee’s own contributions to their pension plan are  nonforfeitable, as are employer contributions once an employee’s benefits  have vested. ERISA, as amended, requires cliff vesting in DBs within 5  years and full vesting under a graduated vesting schedule within 7 years.  cash balance plans (“hybrid” plans) generally will require vesting within 3  years. Beginning in 2008 employer contributions to DC plans must vest in  either a 3-year cliff or 6-year phased schedule (includes service prior to  2007).
subsections: section_title: GAO Simulation of Lowered Vesting Requirements for Employer-Provided Pensions
paragraphs: Using the PENSIM microsimulation model, we projected the impact of a  reduced vesting schedule on retirement benefits. For DB plans we  specified 2- year cliff vesting, and for DC plans we specified 2-year cliff,  and 3-year graduated vesting schedules. For the 1985 cohort, the median  percentage change in benefit levels for women who were affected by the  change was an increase of 6.29 percent. Similarly, men’s median  percentage change in benefits for those affected was of 5.74 percent. (See  table 11.) While the number of women affected by this change was fairly  evenly distributed across the top four income quintiles with fewer in the  lowest, the median percentage change in benefits is much larger for the  women in the lowest quintile than in higher quintiles; for those in the  lowest quintile, the median percentage change in benefit levels was more  than four times the change for women in the highest quintile and nearly  twice that of women in the second lowest income quintile. This suggests  that increases in pension benefits gained as a result of this change  represent a larger portion of total pension accumulation for less affluent  women. Similarly, while the number of married women affected was larger  than the number affected in other marital classifications, the median  percentage change in benefits for never married and divorced women was  almost twice the median percentage change in benefits for married and  widowed women.
section_title: Automatic Rollover upon Leaving Employment Prior to Retirement Age
paragraphs: “Automatic rollover” proposals would maintain the level of accrued  retirement benefits in DC plans when an individual switches jobs before  retirement by automatically contributing retirement balances to a qualified  retirement savings account. According to research conducted by the  Employee Benefit Research Institute in 2003, under 50 percent of  recipients of lump sum distributions between the ages of 30 and 50  reported using the entire portion for reinvestment into a qualified  account. For those aged 21 to 30, the percentage using the entire  distribution for tax-qualified financial savings drops to under 35. This  modification would provide greater retirement income for men and  women. However, some research shows that women roll over a lower  percentage of their accrued balances than men do;, because of this,  requiring automatic rollover may have a larger effect on women overall.
subsections: section_title: GAO Simulation of 100 Percent Automatic Rollover for Employer- Provided Pensions
paragraphs: GAO used the GEMINI microsimulation model to determine what the  impact could be on retirement benefit levels if 100 percent of accrued  retirement balances were reinvested into qualified accounts after every job  change until retirement. For the 1985 cohort, the median percentage  change in benefits for those affected was quite similar for men and  women, 7.3 percent and 7.63 percent, respectively. (See table 13.) This  assumes that those affected would not make any changes in their savings  or spending behavior to offset the requirement. Among women who were  affected by the change, those who were never married or who were  divorced had the largest percentage median increases in benefits.  Additionally, while the number of women affected by this change again  was fairly evenly distributed across the top four income quintiles with  fewer in the lowest, those in the lowest two income quintiles had  substantially larger median percentage changes in benefits than those in  the highest two quintiles.
section_title: Concluding Observations
paragraphs: Despite the increases in women’s labor force participation over the past 55  years, certain groups of women will continue to be vulnerable to economic  insecurity in retirement. While women are working more than in the past,  they remain the primary source of family caregiving and are more likely  than men either to reduce their workforce participation or never to enter  the paid workforce. Consequently, despite elements of the Social Security  and employer-sponsored pension systems that provide retirement income  for low- or non-earning spouses, the remaining gaps between women’s and  men’s labor force participation, earnings, and pension participation will  continue to leave many women with fewer financial resources in  retirement than men. In addition to the choices many women make to stay  out of the workforce or to reduce the amount of their work, certain life  events (such as divorce and widowhood) are likely to exacerbate this  disparity. Ultimately, women’s roles in the workplace and within a family  may hinder them from building sufficient retirement resources, leaving  them at greater risk of poverty in old age.
Other trends can exacerbate the vulnerability of women in retirement.  Many proposed reforms for Social Security and employer-provided  pensions have focused on long-term solvency and financing issues.  Research has shown that many of these types of reforms have the  potential to reduce retirement income from levels scheduled in current  law for a large number of beneficiaries. This is of particular concern for  women because of their reliance on Social Security as a main source of  retirement income. Changes in the structure of employer-sponsored  pensions, which can have some benefits for women, may also have some  negative consequences. Although the shift to DC type plans can have a  positive impact on people who change jobs frequently or work  intermittently, such plans can transfer more of the responsibility to make  prudent investment decisions and to manage longevity risk to individuals.  While this is true for both men and women, it is of particular concern for  women because of their greater longevity. Moreover, the original design of  the Social Security system was based on a particular household  structure—single earner families—and that structure is no longer the  norm in America. If policy makers wish to design a system that adequately  and equitably compensates all retirees, then it will be necessary to design  a system that reflects the diversity of employment patterns and family  structure within the population it serves. In fact, several past reform  proposals included modernization elements that would target benefit  enhancements to various subgroups.
In contemplating modifications to Social Security or employer-provided  pensions, it is helpful to understand all possible effects, including the  impact on Social Security solvency or costs to employers. Each of the  Social Security changes that we modeled would have small, but negative,  effects on program solvency. Small effects such as these, when included in  a larger package of reforms, could be overwhelmed by the effects of other  changes. Nevertheless, the trade-offs between enhanced benefits and costs  are always important to consider. It is also helpful to understand how  changes may affect different types of individuals with different work and  earnings histories—for example, women who never enter the workforce  or choose to reduce their work, possibly to care for children or other  family members. Changes to benefit structures may also have different  effects on individuals within different family structures, such as single- earner married couples, dual-earner households, or unmarried heads of  household. Recognizing these differences is important not only in terms of  improving adequacy and equity in the benefit structure, but also in  understanding how different benefit structures might affect the choices  individuals make regarding their own workforce attachment. With such  knowledge, policy makers have the potential to mitigate both existing  disparities in retirement income as well as the differential effects of  reforms.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the departments of Labor and the  Treasury, the Internal Revenue Service, and the Social Security  Administration. The departments of Labor and the Treasury and the Social  Security Administration provided technical comments, which we  incorporated where appropriate.
We are sending copies of this report to the Secretary of Labor, the  Commissioner of Internal Revenue, the Commissioner of Social Security,  the Secretary of the Treasury, and appropriate congressional committees,  and other interested parties. We will also make copies available to others  upon request. In addition, the report will be available at no charge on  GAO’s Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-7215 or at bovbjergb@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made major contributions to this report  are listed in appendix V.
section_title: Appendix I: Methodology
paragraphs: To identify the effects of individual reform elements on Social Security  and pension benefit levels for women, we used the Policy Simulation  Group’s (PSG) microsimulation models to simulate Social Security  benefits and pension income.
For our simulations, we used PSG’s Social Security and Accounts  Simulator (SSASIM), Genuine Microsimulation of Social Security Accounts  (GEMINI), and Pension Simulator (PENSIM) simulation models. GEMINI  simulates Social Security benefits and taxes for large representative  samples of people born in the same year. GEMINI simulates all types of  Social Security benefits including retired workers’, spouses’, survivors’,  and disability benefits. It can be used to model a variety of changes to  Social Security. GEMINI uses inputs from SSASIM, which has been used in  numerous GAO reports, and PENSIM, which was developed for the  Department of Labor. GEMINI relies on SSASIM for economic and  demographic projections and relies on PENSIM for simulated life histories  of large representative samples of people born in the same year and their  spouses. Life histories include educational attainment, labor force  participation, earnings, job mobility, marriage, disability, childbirth,  retirement, and death. Life histories are validated against data from the  Survey of Income and Program Participation, the Current Population  Survey, Modeling Income in the Near Term (MINT3), and the Panel Study  of Income Dynamics. Additionally, any projected statistics (such as life  expectancy, employment patterns, and marital status at age 60) are, where  possible, consistent with intermediate cost projections from the Social  Security Administration’s Office of the Chief Actuary (OCACT). At their  best, such models can provide only very rough estimates of future  incomes. However, these estimates may be useful for comparing future  incomes across alternative policy scenarios and over time.
GEMINI can be operated as a free-standing model or it can operate as a  SSASIM add-on. When operating as an add-on, GEMINI is started  automatically by SSASIM for one of two purposes. GEMINI can enable the  SSASIM macro model to operate in the Overlapping Cohorts (OLC) mode  or it can enable the SSASIM micro model to operate in the Representative  Cohort Sample (RCS) mode. The SSASIM OLC mode requests GEMINI to  produce samples for each cohort born after 1934 in order to build up  aggregate payroll tax revenues and (Old-Age, Survivors, and Disability  Insurance) OASDI benefit expenditures for each calendar year, which are  used by SSASIM to calculate standard trust fund financial statistics. In  either mode, GEMINI operates with the same logic, but typically with  smaller cohort sample sizes in OLC mode than in the RCS or stand-alone- model mode.
Using the GEMINI model, we estimated Social Security benefits at age 70  for approximately 2 percent of individuals born in each of two illustrative  birth cohorts, 1950 (resulting in a sample of 63,813 individuals) and 1985  (resulting in a sample of 78,857 individuals). We also used the PENSIM  model to estimate pension income for those born in 1985. We simulated  Social Security benefits for two cohorts in order to identify differences in  the effects of modifications that could be due to variations in labor force  participation across generations. We also used the microsimulation  models to simulate Social Security benefits, pension income, and the  earnings of spouses not yet retired, in order to explore the relationships  between benefit levels and workforce attachment and marital status. For  this analysis we simulated benefit levels at ages 67 and 85 for the 1985  birth cohort. These models do not include measures of personal savings,  earnings in retirement, health benefits, or income from other income  support programs.
Additionally, we evaluated the effect of Social Security modifications on a  “low benefit avoidance rate,” a measure produced by the model that  proxies for poverty avoidance. However, it does not include pension  income or savings, and so cannot be called a poverty avoidance measure.  The low benefit avoidance rate is expressed as the percentage of  retirement years in which an individual’s Social Security benefits (plus any  earnings) are above a low-benefit threshold in the GEMINI model (the  thresholds are $9,669 for individuals and $12,186 for couples, in 2007  dollars). Both income and the threshold are based on individual data when  unmarried and on couple data when married.
Benefits and taxes were simulated under our tax increase only (promised  benefits) and proportional benefit reduction (funded benefits)  benchmarks (described below) and certain specific individual  programmatic changes. These simulations are based on the Social Security  Trustees’ 2007 intermediate economic and actuarial assumptions. While  our simulations provide projections of future retirement income, there is a  considerable amount of uncertainty involved with these estimates. Since  these estimates could change significantly, depending on assumptions  used and behavior responses, they should not be considered predictions.  Furthermore, because simulations are sensitive to economic and  demographic assumptions, it is generally more appropriate to compare  benefits across the scenarios than to focus on the actual estimates  themselves. Therefore, to avoid inappropriate comparisons, we evaluated  the effects of modifications based on the changes in benefit levels rather  than comparing actual benefit levels.
In general, GAO has suggested that policy makers should consider three  basic criteria when evaluating reform proposalsthe extent to which the proposal achieves sustainable solvency and  how the proposal would affect the economy and the federal  budget;  the balance struck between the goals of individual equity (rates of  return on individual contributions) and income adequacy (level  and certainty of monthly benefits); and how readily such changes could be implemented, administered,  and explained to the public.
Moreover, changes to the system should be evaluated as packages that  strike a balance among the individual elements of the proposal and the  interactions among these elements. The overall evaluation of any  particular reform proposal depends on the weight individual policy makers  place on each of the above criteria.
However, for the purposes of this study we evaluated only specific  individual modifications. We looked at certain specific changes in order to  focus on those that account for more recent shifts in family structure and  labor force composition. In particular, we wanted to identify the direction  of the impact of modifications that might be used to mitigate the effects of  broad reform packages likely to reduce benefits. Nevertheless, we  recognize that there could be important interaction effects with any set of  reforms and maintain the importance of considering all possible effects of  any reform package as a whole. The solvency impact of any single  programmatic change may be marginal and, as part of a package, could be  overwhelmed by other changes. Nevertheless, in appendix IV, we have  provided the impact of each change on the Social Security Trust Fund  balance, after achieving 75-year solvency with the benchmark scenarios.  Additionally, because we simulated programmatic changes in isolation we  could not calculate traditional equity measures, which relate benefits  received to taxes paid. Because we simulated programmatic changes in  isolation on top of solvent benchmark scenarios, the results did not  achieve long-term solvency. We did not speculate on how the changes  would be paid for in the context of overall reform. Without information on  total contributions or benefits under each simulation, traditional equity  measures would not be meaningful. Finally, given the limited scope of the  changes we simulated, we did not address issues of implementation,  administration, or public comprehension.
subsections: section_title: Assumptions and Limitations
paragraphs: Simulating retirement income almost 50 years into the future requires  many assumptions and simplifications, and consequently, our simulations  have a number of limitations. A primary limitation of our analysis is that it  does not include important components of retirement income such as  personal savings, earnings in retirement, health benefits, and other public  assistance programs such as Supplemental Security Income (SSI). To  facilitate our modeling analysis, we made a variety of assumptions  regarding economic and demographic trends. In choosing our  assumptions, we focused our analysis to illustrate relevant points about  distributional effects and hold equal as much as possible any variables that  were either not relevant to or would unduly complicate that focus. As a  result of these assumptions, as well as issues inherent in any modeling  effort, our analysis has some key limitations.
subsections: section_title: 2007 Social Security Trustees’ Assumptions
paragraphs: The simulations are based on economic and demographic assumptions  from the 2007 Social Security Trustees’ report. We used the Trustees’  intermediate assumptions for inflation, real wage growth, mortality  decline, immigration, labor force participation, and interest rates.
section_title: Family Equivalence Scale
paragraphs: For some of our analyses, we used a measure of income adjusted to  account for household size and economies of scale. We did this to  facilitate comparisons between nonmarried persons and married persons  whose household income includes income from both spouses that can  vary significantly between them. For instance, although a married couple  may need approximately twice as much for food and clothing as a single  person, other needs, such as housing and transportation, are not additive  in the same way. However, the effect of using data adjusted for household  size on a reform targeted at married couples, such as a change in spousal  benefits, is that the change in benefits resulting from the program  modification is shared by both the husband and the wife. Thus, population  data based on the adjusted measure describe the number of people whose  household had a benefit change resulting from the modification. For  example, in the “Decreased Spousal Benefit and Increased Survivor  Benefit” modification, the family equivalence data indicate that a nearly  equal percent of men and women are affected by the modification because  the effect of the benefit change is shared by both spouses. Therefore, in  order to identify just the percent of men and women who had changes to  their own benefit as a result of the program change, percentages are also  calculated based on benefits not adjusted for household size.
The adjustment is made by dividing household benefit levels by a “family  equivalence scale.” This equivalence scale reflects both differences in  consumption by adults and children under 18 and the economies of scale  that benefit families. The family equivalence scale in the GEMINI model  (shown below) and its default parameters are based on the  recommendations of the National Academy of Sciences’ Panel on Poverty  and Family Assistance.
Family equivalence scale = (A + P*k)where A is the number of adults in the family,  k is the number of children, each of whom is treated as a  proportion P of an adult, and  f is the scale economy factor.
Thus, the formula calculates the number of adult equivalents (A + P*k)  and raises the result to a power f that reflects economies of scale for  families. We used the default parameters in the model, so that both P and f  are 0.70.
section_title: Description of Simulated Social Security Modifications
subsections: section_title: Dependent Care Credit— Analyzing Impact of Inserting a “Credit”
paragraphs: To simulate a dependent care credit we provided a “credit” in the OASDI  work record that would top off a year’s earnings to the level of half of  average wages. In a given year, the OASDI work records of individuals  with a child 5 years of age or under and who had earnings less than one- half of average wages were credited with one half of average wages (as  measured by the Average Wage Index used by the Social Security  Administration). A lifetime maximum of five credits was allowed. If both  parents met these criteria in any given year, only the lower-earning parent  received the credit; if both parent’s earnings were identical in any given  year, the credit was split evenly. Credits were not counted toward benefit  eligibility. In our simulation the reform went into effect in 2010.
This change as specified has not been scored publicly by OCACT. Using  the OLC mode of SSASIM that mimics the intermediate assumptions of the  2007 Trustees’ report, we estimated this modification as increasing the size  of the long-range actuarial deficit by 0.19 percent under the “promised  benefits” benchmark and by 0.17 under the “funded benefits” benchmark.
section_title: Decrease Spousal Benefit/Increase Survivor Benefit
paragraphs: To simulate the effects of a decrease in spousal benefits paired with an  increase in survivor benefits, we reduced spousal benefits from one-half to  one-third of the retired worker’s benefit. We also increased the survivor  benefit to 75 percent of the couple’s previous combined benefit level, if  higher than the survivor benefit available under current law. The benefit of  this reform is capped at the average PIA for all new retirees. Our  simulation of the reform went into effect in 2010.
These changes as specified have not been scored publicly by OCACT.  Using the OLC mode of SSASIM that mimics the intermediate assumptions  of the 2007 Trustees’ report, we estimated this modification as decreasing  the size of the long-range actuarial deficit by 0.02 percent under the  “promised benefits” benchmark and increasing the size of the long range  actuarial deficit by 0.06 under the “funded benefits” benchmark.
section_title: Increased Survivor Benefit Only
paragraphs: We also simulated the effects of an increase in survivor benefits  independently. To do this, as above, we increased the survivor benefit to  75 percent of the couple’s previous combined benefit level, if higher than  the survivor benefit available under current law. The benefit of this reform  is capped at the average PIA for all new retirees. Our simulation of the  reform went into effect in 2010.
This change is similar to one scored by OCACT as part of the OASDI  Financial Effects of the Social Security Guarantee Plus Act of 2005 (May  12, 2005), which estimated a 0.08 percent increase to the long-range  actuarial deficit, and Estimated OASDI Financial Effects of the  Bipartisan Retirement Security Act of 2005 (November 4, 2005), which  also estimated a 0.08 percent increase to the long-range actuarial. Using  the OLC mode of SSASIM that mimics the intermediate assumptions of the  2007 Trustees’ report, we estimated this modification as increasing the size  of the long-range actuarial deficit by 0.07 percent under the “promised  benefits” benchmark and by 0.14 percent under the “funded benefits”  benchmark.
section_title: Reduce 10-Year Marriage Requirement
paragraphs: To simulate the effects of a reduced marriage requirement to qualify for  divorced spouse benefits, we reduced duration of marriage requirements  from 10 to 7 years. In our simulation, this reform took effect in 2010.
This change as specified has not been scored publicly by OCACT. Using  the OLC mode of SSASIM that mimics the intermediate assumptions of the  2007 Trustees’ report, we estimated this change as increasing the size of  the long-range actuarial deficit by 0.02 percent under the “promised  benefits” benchmark and increasing the size of the long-range actuarial  deficit by 0.06 under the “funded benefits” benchmark.
section_title: Increase/Strengthen Minimum Benefit
paragraphs: To simulate an increased minimum benefit, we provided a partial benefit  enhancement for workers with more than 80 quarters of coverage and  provide a full benefit enhancement to workers with 120 quarters of  coverage. It would equal 120 percent of the aged poverty threshold for  workers with 120 quarters of coverage and be linearly prorated to zero for  workers with 80 quarters of coverage. These provisions would also apply  in determining the PIA levels used for calculating auxiliary benefits and DI  benefits. The first year of full implementation is 2010.
This modification as specified has not been scored publicly by OCACT.  Using the OLC mode of SSASIM that mimics the intermediate assumptions  of the 2007 Trustees’ report, we estimated this change as increasing the  size of the long-range actuarial deficit by 0.05 percent under the “promised  benefits” benchmark and increasing the size of the long range actuarial  deficit by 0.13 percent under the “funded benefits” benchmark as well.
section_title: Description of Simulated Pension Modifications
subsections: section_title: Decrease Vesting Requirements
paragraphs: In our modeling of this modification, we reduced maximum allowable  vesting periods to 2 years for all pension programs with cliff vesting and 3  years for all pension programs with graduated vesting. If plans within the  model already used shorter vesting schedules, those vesting schedules  remained unchanged. In our simulation, this change took effect in 2010.
section_title: Automatic Rollover
paragraphs: In order to consider the potential upper bound of impact for a  modification that would ensure full rollover of retirement assets at  preretirement job terminations, we modeled a full rollover of retirement  balances into qualified accounts. In our simulation, this change took effect  in 2010.
section_title: Data Reliability
paragraphs: To assess the reliability of simulated data from GEMINI, we reviewed  PSG’s published validation checks, examined the data for reasonableness  and consistency, and compared our solvency estimates, where applicable,  with published results from the actuaries at the Social Security  Administration.
PSG has published a number of validation checks of its simulated life  histories. For example, simulated life expectancy is compared with  projections from the Social Security Trustees; simulated benefits at age 62  are compared with administrative data from SSA; and simulated  educational attainment, labor force participation rates, and job tenure are  compared with values from the Current Population Survey. We found that  simulated statistics for the life histories were reasonably close to the  validation targets.
section_title: Benchmark Policy Scenarios
paragraphs: According to current projections of the Social Security Trustees for the  next 75 years, revenues will not be adequate to pay full benefits as defined  by the current benefit formula. Therefore, estimating future Social  Security benefits should reflect that actuarial deficit and account for the  fact that some combination of benefit reductions and revenue increases  will be necessary to restore long-term solvency.
To illustrate a full range of possible outcomes, we developed hypothetical  benchmark policy scenarios that would achieve 75-year solvency either by  only increasing payroll taxes or by only reducing benefits. In developing  these benchmarks, we identified criteria to use to guide their design and  selection. Our tax-increase-only benchmark simulates “promised benefits,”  or those benefits promised by the current benefit formula, while our  benefit-reduction-only benchmark simulates “funded benefits,” or those  benefits for which currently scheduled revenues are projected to be  sufficient. Under the latter policy scenario, the benefit reductions would  be phased in between 2010 and 2040 to strike a balance between the size  of the incremental reductions each year and the size of the ultimate  reduction.
Social Security Administration (SSA) actuaries scored our original 2001  benchmark policies and determined the parameters for each that would  achieve 75-year solvency. Table 8 summarizes our benchmark policy  scenarios. For our benefit reduction scenario, the actuaries determined  these parameters assuming that disabled and survivor benefits would be  reduced on the same basis as retired worker and dependent benefits. If  disabled and survivor benefits were not reduced at all, reductions in other  benefits would be greater than shown in this analysis.
subsections: section_title: Criteria
paragraphs: According to our analysis, appropriate benchmark policies should ideally  be evaluated against the following criteria:  1.  Distributional neutrality: The benchmark should reflect the current  system as closely as possible while still restoring solvency. In  particular, it should try to reflect the goals and effects of the current  system with respect to redistribution of income. However, there are  many possible ways to interpret what this means, such as  a.  producing a distribution of benefit levels with a shape similar to  the distribution under the current benefit formula (as measured by  coefficients of variation, skewness, kurtosis, and so forth);  b.  maintaining a proportional level of income transfers in dollars;  c.  maintaining proportional replacement rates; and  d.  maintaining proportional rates of return.  2.  Demarcating upper and lower bounds: These would be the bounds  within which the effects of alternative proposals would fall. For  example, one benchmark would reflect restoring solvency solely by  increasing payroll taxes and therefore maximizing benefit levels, while  another would solely reduce benefits and therefore minimize payroll  tax rates.  3.  Ability to model: The benchmark should lend itself to being modeled  within the GEMINI model.  4.  Plausibility: The benchmark should serve as a reasonable alternative  within the current debate; otherwise, the benchmark could be  perceived as an invalid basis for comparison.  5.  Transparency: The benchmark should be readily explainable to the  reader.
section_title: Tax-Increase-Only or “Promised Benefits,” Benchmark Policies
paragraphs: Our tax-increase-only benchmark would raise payroll taxes once and  immediately by the amount of Social Security’s actuarial deficit as a  percentage of payroll. It results in the smallest ultimate tax rate of those  we considered and spreads the tax burden most evenly across generations;  this is the primary basis for our selection. The later that taxes are  increased, the higher the ultimate tax rate needed to achieve solvency, and  in turn the higher the tax burden on later taxpayers and lower on earlier  taxpayers. Still, any policy scenario that achieves 75-year solvency only by  increasing revenues would have the same effect on the adequacy of future  benefits in that promised benefits would not be reduced. Nevertheless,  alternative approaches to increasing revenues could have very different  effects on individual equity.
section_title: Benefit-Reduction-Only, or “Funded Benefits,” Benchmark Policies
paragraphs: We developed alternative benefit reduction benchmarks for our analysis.  For ease of modeling, all benefit reduction benchmarks take the form of  reductions in the benefit formula factors; they differ in the relative size of  those reductions across the three factors, which are 90, 32, and 15 percent  under the current formula. Each benchmark has three dimensions of  specification: scope, phase-in period, and the factor changes themselves.  For our analysis, we apply benefit reductions in our benchmarks very  generally to all types of benefits, including disability and survivors’  benefits as well as old-age benefits. Our objective is to find policies that  achieve solvency while reflecting the distributional effects of the current  program as closely as possible. Therefore, it would not be appropriate to  reduce some benefits and not others. If disabled and survivor benefits  were not reduced at all, reductions in other benefits would be deeper than  shown in this analysis.
subsections: section_title: Phase-in Period
paragraphs: We selected a phase-in period that begins with those becoming initially  entitled in 2013 and continues for 30 years. We chose this phase-in period  to achieve a balance between two competing objectives: (1) minimizing  the size of the ultimate benefit reduction and (2) minimizing the size of  each year’s incremental reduction to avoid “notches,” or unduly large  incremental reductions. Notches create marked inequities between  beneficiaries close in age to each other. Later birth cohorts are generally  agreed to experience lower rates of return on their contributions already  under the current system. Therefore, minimizing the size of the ultimate  benefit reduction would also minimize further reductions in rates of return  for later cohorts. The smaller each year’s reduction, the longer it will take  for benefit reductions to achieve solvency, and in turn the greater the  eventual reductions will have to be. However, the smallest possible  ultimate reduction would be achieved by reducing benefits immediately  for all new retirees by 13 percent; this would create a notch.
In addition, we feel it is appropriate to delay the first year of the benefit  reductions for a few years because those within a few years of retirement  would not have adequate time to adjust their retirement planning if the  reductions applied immediately. The Maintain Tax Rates (MTR)  benchmark in the 1994-1996 Advisory Council report also provided for a  similar delay.
Finally, the timing of any policy changes in a benchmark scenario should  be consistent with the proposals against which the benchmark is  compared. The analysis of any proposal assumes that the proposal is  enacted, usually within a few years. Consistency requires that any  benchmark also assumes enactment of the benchmark policy in the same  time frame. Some analysts have suggested using a benchmark scenario in  which Congress does not act at all and the trust funds become exhausted.  However, such a benchmark assumes that no action is taken, while the  proposals against which it is compared assume that action is taken, which  is inconsistent. It also seems unlikely that a policy enacted over the next  few years would wait to reduce benefits until the trust funds are  exhausted; such a policy would result in a sudden large benefit reduction  and create substantial inequities across generations.
section_title: Defining the PIA Formula Factor Reductions
paragraphs: When workers retire, become disabled, or die, Social Security uses their  lifetime earnings records to determine each worker’s PIA, on which the  initial benefit and auxiliary benefits are based. The PIA is the result of two  elements—the Average Indexed Monthly Earnings (AIME) and the benefit  formula. The AIME is determined by taking the lifetime earnings record,  indexing it, and taking the average of the highest 35 years of indexed  wages. To determine the PIA, the AIME is then applied to a step-like  formula, shown here for 2007.
PIA =  90%   (AIME ≤ $680)  + 32%   (AIME > $680 and ≤ $4100)  + 15%   (AIME > $4100)  where AIMEi is the applicable portion of AIME.
All of our benefit-reduction benchmarks are variations of changes in PIA  formula factors.
Proportional reduction: Each formula factor is reduced annually by  subtracting a constant proportion of that factor’s value under current law,  resulting in a constant percentage reduction of currently promised  benefits for everyone. That is,    x)   represents the three PIA formula factors in year t and  x = constant proportional formula factor reduction.
The value of x is calculated to achieve 75-year solvency, given the chosen  phase-in period and scope of reductions.
The formula for this reduction specifies that the proportional reduction is  always taken as a proportion of the current law factors rather than the  factors for each preceding year. This maintains a constant rate of benefit  reduction from year to year. In contrast, taking the reduction as a  proportion of each preceding year’s factors implies a decelerating of the  benefit reduction over time because each preceding year’s factors get  smaller with each reduction. To achieve the same level of 75-year  solvency, this would require a greater proportional reduction in earlier  years because of the smaller reductions in later years.
The proportional reduction hits lower earners harder than higher earners  because the constant x percent of the higher formula factors results in a  larger percentage reduction over the lower earnings segments of the  formula. For example, in a year when the cumulative size of the  proportional reduction has reached 10 percent, the 90 percent factor  would then have been reduced by 9 percentage points, the 32 percent  factor by 3.2 percentage points, and the 15 percent factor by 1.5  percentage points. As a result, earnings in the first segment of the benefit  formula would be replaced at 9 percentage points less than the current  formula, while earnings in the third segment of the formula would be  replaced at only 1.5 percentage points less than the current formula.
Table 9 summarizes the features of our benchmarks.
section_title: Appendix II: Simulation Results for Social Security Modifications
paragraphs: To account for differences in household size and economies of scale  associated with larger households, we based our analyses on benefit levels  adjusted for household size (see app. I for more information). However,  the effect of using data adjusted for household size on a reform targeted at  married couples, such as a change in spousal benefits, is that the change in  benefits resulting from the program modification is shared by both the  husband and the wife. Thus, population data based on the adjusted  measure describe the number of people whose household had a benefit  change resulting from the modification. For example, in the “Decreased  Spousal Benefit and Increased Survivor Benefit” modification, the family  equivalence data indicate that a nearly equal percent of men and women  are affected by the modification because the effect of the benefit change is  shared by both spouses. Therefore, in order to identify only the percent of  men and women who had changes to their own benefit as a result of the  program change, percentages are also calculated based on benefits not  adjusted for household size.
section_title: Appendix III: Low Benefit Avoidance Rates
paragraphs: The low benefit avoidance rate is expressed as the percent of retirement  years in which an individual’s Social Security benefits (plus any earnings)  are above a low-benefit threshold (set at $9,669 for individuals and $12,186  for couples, in 2007 dollars). Both income and the threshold are based on  individual data when unmarried and on couple data when married.
section_title: Appendix IV: Effect of Simulated Reform on Social Security System Solvency
paragraphs: Appendix IV: Effect of Simulated Reform on  Social Security System Solvency reduction only)
Increased survivor benefit with   decreased spousal benefit   Reduced marriage requirement   (from 10 years to 7 years)
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: Alicia Puente Cackley, Assistant Director; Mindy Bowman, Analyst-in- Charge; Jennifer Cook, Analyst; and Meaghan Muldoon Mann, Senior  Analyst, made significant contributions to all phases of this report. In  addition, Melinda Cordero, Nagla’a El-Hodiri, and Walter Vance provided  data analysis; Joseph Applebaum, Michael Collins, Chuck Ford, Gene  Kuehneman and Ken Stockbridge provided methodological assistance;  Sheila McCoy provided legal assistance; Marc Goldwein and Emily Pickrell  assisted with data collection and analysis; and Sue Bernstein, Kim  Granger, Kevin Kumanga, Lise Levie, and Beth Morrison assisted in report  development.