Recently, Alicia Munnell, Alice Zulkarnain, and I published a paper in the journal Demography on the topic of widows’ poverty. In the past, widows were an extremely vulnerable group with a high rate of poverty. The good news: things have gotten better. The bad news: many older women still have high rates of poverty. You can read more about the paper below, or watch the video of me talking about it at the Retirement Research Consortium in 2018. And yes, a retirement research consortium conference is exactly as exciting as it sounds. That is to say, pretty darn exciting!

Widows Poverty RRC

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Presentation to the Social Security Retirement Research Consortium (2018). For Closed Captions you can click on the CC option.

Widow’s Poverty: The Good News

Honestly, this blog is often sort of sad. Stagnating income for middle-income workers. A stubborn racial income gap. And, an unequal recovery from the Covid-19 recession. None of these things make you want to stand up and dance. But the poverty rate for widows has been dropping consistently for the last two decades. Figure 1 shows this drop between 1994 and 2014, the period our Demography study covered. While widows are more than twice as likely to be in poverty than still married women, the rate has dropped by over a quarter.

Figure 1. Poverty Rates for Women Ages 65-85 by Marital Status, 1994-2014

Source: Munnell, Zulkarnain, and Sanzenbacher (2019). Center for Retirement Research at Boston College.

Why did this decline happen? First of all, women — and therefore widows — became more educated over this period. The average education of widows age 65-85 increased from 10.7 years to 12.1 years over the period in the graph. And, women’s labor force participation increased too. By a lot. In 1994, the typical woman in our sample had 14.7 years of work experience. By 2014, it was 25.2 years. All that education and experience makes women more financially independent. So, when their husbands die, women are better prepared than they used to be.

So, that’s one piece of good news. But there’s more! My coauthors and I expect this trend to continue through at least 2029. For one thing, over the next decade, older women are going to become even more educated. Our calculations show that by 2029, the typical 65-85 year old widow will have another year of education. Widows are also going to become even more experienced in the workplace, adding another six years of work experience. These facts will probably drive widows’ poverty even lower.

The Bad News: Other Older Women

What’s interesting (and troubling) is that this extra education and experience is being driven partially by something called “selection into marriage.” A few months ago, I pointed out that marriage is becoming more associated with higher-socioeconomic status individuals. So, one reason widows are becoming more educated and more likely to work is because the women who still get married are above-average in these respects. The problem is, that this fact means that non-married women won’t see the same improvements.

Indeed, when we project the poverty rate of single and divorced women into the future we do not expect any improvement. Today, the poverty rate of older never married and divorced women is about 21 to 22 percent. Our paper projects that in 2029 it is likely to still rest around 22 percent. In other words, a lot of the future improvement that will be seen by widows is not going to be experienced by other single women.

This lack of improvement is a problem. After all, marriage rates are falling and despite an overall fall, divorce rates among older people are rising. These facts mean that more and more older women will end up having never been married or divorced. And these women will still be vulnerable to poverty.

Social Security is Important

When looking at the poverty rate of older single women today, it can be easy to forget the past. I want to pull a quote from the paper that inspired this post:

During the Great Depression, poverty among people aged 65 and older was estimated to have been greater than 50%. After Social Security was introduced in 1935, and as more people who paid into the system started receiving benefits, poverty among this age group started to decline. Furthermore, increases in the generosity of Social Security benefits, especially those that occurred between the mid-1960s and late-1970s, narrowed the poverty gap between older and younger people.

Munnell, Zulkarnain, and Sanzenbacher (2020).

In other words, without Social Security the poverty rates of single women would be much, much, much higher. That was three “muchs.” That’s serious. Indeed, one of the reasons more work experience translates to less poverty is because of Social Security. As women work more, their Social Security benefit goes up, making them less reliant on their husband’s benefit.

Yet, despite the program’s importance, the Trust Fund is set to run out in the mid-2030s. If you are 65 today, that is within your projected lifetime. When the Trust Fund runs out, benefits will drop by 20 percent. So, maybe we should, you know, start making a plan to get the Trust Fund shored up. Or else the happy story of declining widows’ poverty will be just that…a story.