Earnings replacement rates of retired couples: findings from the retirement history study.

The earnings replacement rates of retired couples, which take into account the earnings and benefits of wives, are important for assessing the adequacy of social security benefits. Using data from the Social Security Administration’s longitudinal Retirement History Study, this article presents the first view of replacement rates for couples. The findings show that, though about half the wives claiming benefits in 1968-74 were retired workers, their benefits were not necessarily much larger than what they would have received as dependent spouses. Couples with retired-worker wives had higher absolute retirement benefits, but the women’s preretirement earnings caused the replacement rates of these couples to be lower than those of couples with dependent wives. In recent years, earnings have risen almost as fast as social security benefits and moderated the increases in replacement rates. These findings contrast sharply with assumptions in some analyses of work and retirement patterns of couples. The typical wife is as likely to be employed as keeping house, though she earns much less than her husband. Instead of waiting until age 65 to claim benefits, most couples choose early retirement and accept an actuarial reduction in their benefits. Research that assumes age-65 retirement and dependency status for wives based on hypothetical earnings has produced higher replacement rates than those calculated by means of this sample of actual retired couples.