Marital Histories, Gender, and Financial Security in Late Mid-Life: Evidence from Four Cohorts in the Health and Retirement Study

WP#2016-4

Abstract

Marital status is an established predictor of financial well-being in later life, with continuously married people enjoying considerable economic benefits that accumulate over the life course, contrasting sharply with the economic vulnerabilities faced by divorced, widowed, or never-married individuals.  Although prior work suggests that marital histories—including the number and sequencing of past and present unions and dissolutions—have become more complex for more recent cohorts, the economic ramifications of this demographic shift are unclear.  Further, how shifts away from continuous marriage will impact women’s financial security in later life is unknown.  Using data from the Health and Retirement Study, we examine cohort and gender variation in the relationship between elaborated marital history measures and financial security at ages 51-56, when wealth and earnings are at or near lifetime peaks.  We examine three financial measures (negative, zero, and positive wealth; positive wealth levels; earnings) that capture distinct components of financial security as individuals approach retirement.

The paper found that:

  • Middle Baby Boomers born in the mid- to late-1950s differ from older cohorts born in the mid- to late-1930s by both marital history and financial security measures.
  • Middle Baby Boomers are more likely to have negative wealth (i.e. debt) or zero wealth, and those who have positive wealth have lower levels of wealth. On the other hand, Middle Baby Boomers working full-time have higher earnings than earlier cohorts, especially women.
  • More recent cohorts are less likely to be continuously married than previous cohorts.
  • The relationship between marital history and financial security depends on whether wealth or earnings is examined. Specifically, the economic benefits of continuous marriage are more pronounced for wealth than earnings.

 
The policy implications of the findings are:

  • Social Security policy changes might consider the increasing complexity in marital histories of more recent cohorts.
  • Greater attention can be paid to two growing segments of adults in late mid-life: those with zero wealth and those in debt, who are approaching retirement in a particularly precarious position. They are more likely to rely on Social Security and may be particularly adversely affected if proposed benefit cuts were enacted.