The Motherhood Penalty: Reduced Social Security Benefits

A recent study looked at the question of whether Social Security benefits are lower for mothers, resulting in a “motherhood penalty.” The study found that the lifetime earnings of mothers with one child are almost 30% lower than women who have no children. Each child further reduces lifetime earnings of women by an additional 3%. In evaluating how being a mother affects Social Security benefits, the penalty – although smaller – is still significant: a mother with one child receives 16% less in benefits than women without children. Benefits are further reduced by 2% for each additional child.

For women who receive Social Security benefits through a spouse, the motherhood penalty is almost erased. But for those who receive such benefits based on their own earnings, their Social Security benefits are significantly reduced. Despite their increased participation in the workforce, women still are more likely to take on primary responsibility for child rearing. This time out of the workforce, along with higher costs of job searches and finding an appropriate job match for their skills and experience, results in a significant hit to their earnings with no adequate time to make up for that loss before retirement.

Although spousal benefits play a significant role in reducing the gap between the amount of Social Security benefits received by women and men, fewer women will be retiring based on a spouse’s Social Security benefits. As the number of women in the workforce has increased significantly over the past few decades, and as the number of retirees who are single women has also increased, more women will be claiming Social Security benefits based on their own earnings histories. Assuming that mothers will continue to earn less than men over the course of their work lives, this decline in the proportion of women receiving spousal benefits means that they will receive even lower Social Security benefits in retirement.

Source: M. Rutledge, A. Zulkarnain, and S. King, How Much Does Motherhood Cost Women in Social Security Benefits? CRR WP 2017-14 Oct, 2017 Center for Retirement Research at Boston College.

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