Married Women Lost Most of Their Retirement Income Edge: Study

An increase in the U.S. retirement age and changes in how couples build up Social Security benefits have wiped out most of the retirement preparedness edge that married women once had over other women, according to a team of economists led by Alicia Munnell.

Munnell’s team divided women into three groups: women who had never been married; women who had been married for fewer than half of their adult lives, who were classified as “mostly single”; and women who had been married for more than half of their adult lives, who were classified as “mostly married.”

The team then used national survey data to estimate how much wealth women in different marital status categories, and in different age groups, had when they were about age 60.

The team found that the median pre-retirement wealth level was much lower for mostly married women born from 1954 through 1959, in the middle of the baby boom, than for the mostly married women born from 1942 through 1947.

“The reason is, in large part, the declining economic fortunes of their husbands, who experienced the full impact of the rise in Social Security’s full retirement age and labor market setbacks during the Great Recession without countervailing improvements in education and earnings,” Munnell’s team writes, in a paper posted on the website of the Boston College Center for Retirement Research.

Another issue is that, as more married women have entered the workforce, existing Social Security benefits calculation rules have tended to reduce the percentage of a couple’s pre-retirement earnings that the couple’s Social Security benefits will replace.

The Researchers

Munnell is director of the Center for Retirement Research at Boston College and the author of many of the academic papers that have shaped public and private U.S. retirement benefits arrangements.

She wrote the new paper with Siyan Liu and Laura Quinby, who are both researchers at the center.

The Paper

The economists used data from the University of Michigan’s Health and Retirement Study survey program, from 1992 through 2020, to get information about the wealth level of women in the three different marital status categories during a key pre-retirement period: when the women were ages 59 through 60.

The economists looked at several retirement preparedness indicators, including the “income replacement rate,” or the percentage of pre-retirement earnings that a household’s retirement nest egg can replace.

The economists included the value of the husbands’ income and assets, and a couple’s Social Security benefits, in the calculations, but not the value of any home, because of a belief that most older women try to avoid tapping the value of their homes.

The Results

The economists depended on extra projections to calculate the late boomer women’s income replacement rate, because only boomers born before 1960 had reached age 60 by the beginning of 2020.

Here’s how projected median pre-retirement income replacement rate estimates compare for the 1942-1947 war babies and the 1954-1959 mid boomers:

• Never married women: Increased to 34% for the mid boomers, from 24% for the war babies.
• Mostly single women: Fell to 33% for the mid boomers, from 36% for the war babies.
• Mostly married women: Fell to 38% for the mid boomers, from 47% from the war babies.

Munnell’s team believes that the numbers will look about the same for late boomers who were never married, or mostly single, but even worse for the late boomers who were mostly married.

The team predicts that the median income replacement rates will continue to be 34% for never married late boomers, and 33% for mostly single late boomers, but fall further, to 35%, for the late boomers who have been mostly married.

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