Modernizing Social Security: Caregiver Credits

Women still tend to work fewer years and earn less than men, which leads to less income in retirement. One reason is that women are often still the main family caregiver. Traditionally, Social Security has recognized this role by providing spousal and widow benefits for married women. Today, however, many women are not eligible for these benefits because they never married or they divorced prior to the 10-year threshold needed to qualify. Even those who are married are less likely to receive a spousal benefit, as their worker benefit is larger. Thus, many mothers receive little to no support to offset lost earnings due to childrearing.

Given this concern, some policy experts propose wage credits to boost a caregiver’s earnings record and, thus, her retirement benefits. Such credits – which sometimes cover caring for an elderly relative as well as a child – are common in other developed countries. These credits are designed to serve one or more goals, which may include improving benefit adequacy, rewarding unpaid care, or even encouraging new parents to return to work. For the United States, being clear about the credits’ objective is important in assessing what program design offers the best fit.

This brief is the second in a series on modernizing Social Security to account for changing social, economic, and demographic circumstances. The discussion proceeds as follows. The first section describes Social Security benefits and changing family patterns. The second section looks at caregiver benefits in two other countries. The third section covers U.S. reform proposals, while the fourth assesses these proposals based on three criteria: targeting efficiency, administrative feasibility, and cost offsets. The final section concludes that support for caregiving can be well targeted if the goal is clear; administering a credit is relatively easy; and the cost could be offset by reducing benefits somewhat for higher earners.

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