The Cost of Solo Aging
Married people tend to build wealth and avoid poverty better in old age than unmarried people, a new study finds
By Tara Law
The United States is experiencing a profound generational shift on marriage: most Americans still walk down the aisle before retirement age, but a growing number are staying single.
While Census Bureau data says that just 4% of people aged 75 and over have never married, the figure rises to 8% of Americans aged 65 to 74 and 13% of people from 55 to 64.
As more people age alone, they may face greater financial risks. Married people, on average, have higher household incomes and net worths, and tend to be less likely to be poor than those who are divorced, widowed or who have never gotten married. This is according to a study published in the Journal of Marriage and Family, which looked at data tracking 5,269 people in Wisconsin from ages 18 to 72 between 1957 and 2011. The study looked exclusively at white people.
Advantages of Marriage
Deborah Carr, the study’s lead author, noted that “married people do better than unmarried people” on various economic measurements — from income, to wealth, to poverty rate. This was the case, she said, even when the researchers factored in personal traits that could explain the differences between groups, such as health, personality traits and education level.
The biggest surprise, Carr said, was the struggle of single men. Compared with men who are divorced, windowed or married, lifelong singles’ total household incomes were about half those of married men. For men who’ve never tied the knot, 18.3% were poor, compared with 3.6% of married men.
Single people’s finances are buffeted by multiple challenges, the study suggests. For instance, they don’t have a partner to split the costs of life. Over decades, they must cover the costs of everything — from housing to hotel rooms to toothpaste — by themself. When they encounter obstacles in life, such as needing a caregiver during an illness, they may be more likely to need to pay someone to assist them.
Moreover, in the U.S., married people have access to various legal and policy privileges, such as the option to collect Social Security benefits based on a spouse’s earnings or collect as much as half of their spouse’s benefit after a divorce.
Another major factor, Carr suspects, is workplace bias against unmarried people. “There’s the assumption that if you’re a married man, you’re going to work really hard, and you’re really stable. And as a result, you deserve the raises, you deserve the promotion,” she says.
Divorced people also struggle more financially than those who have remained married, although ending a marriage has a bigger impact on women’s wallets: divorced women had about 40% of the wealth of married women, per the study. Carr said this may be because women prioritized their families and home lives.
“A lot of the sacrifices that women make when they are married come back to hurt them once that marriage ends,” she said.
Single? Start Planning Early
One piece of evidence comes from looking at never-married women. Unlike women with other married statuses, who lag behind comparable men, never-married women are in a similar financial position to never-married men. This suggests they may have been less likely to prioritize their home lives over their careers.
Given the obstacles faced by single people, it may be even more important for them to plan for their financial futures — and to start planning as soon as possible. Surprisingly, many people never do. Annamaria Lusardi, a professor of finance at Stanford Graduate School of Business, says that her research has found that over half of people fail to plan for their financial futures.
Lusardi says people should turn financial planning into a habit, just as people exercise or meet friends regularly. “Let’s add this regular activity, which is taking care of our personal finances, “ she says.
An important first step for many people may be improving their financial literacy — that is, their understanding of basic investing ideas and how to use them to make informed decisions about money.
Financial literacy tends to be lower among women, which may help explain why women who are divorced or widowed are more likely to struggle financially, says Lusardi. She suggests seeking out resources through your workplace’s HR office, the Consumer Finance Protection Bureau or from an investment adviser.
Why Keep Working?
If you’re concerned about your finances, one key option may be working as many years as you can. Working later means you spend more years putting money into your 401(k) or other retirement plans and fewer years taking it out; you also keep drawing on your employer’s benefits, says Barbara O’Neill, a certified financial planner and the author of “Flipping a Switch: Your Guide to Happiness and Financial Security in Later Life.”
O’Neill also recommends working until you turn 70 to qualify for the largest Social Security benefit you can get.
After retirement, it’s also important to have a plan on how you’ll conserve and spend down your wealth — especially now that, on average, people are living longer than ever. That includes both major expenses, such as planning for the possibility you’ll need long-term care, as well as resources in your community that may help you save money, such as programs for low-cost transportation.
Build a Social Network
O’Neill recommends doing research at a local senior center to figure out what resources are available to you in your community. One way to learn about what social services are available, she notes, is by calling 211.
Relationships are another important asset for older singles, says O’Neill, and you should have conversations with loved ones if you might need their help in the future.
“If you have no spouse, and you have no children, you darn well better have some good social capital — a network of siblings, cousins, friends, that you can rely on,” says O’Neill. “It’s not just about saving money, it’s also about building social capital. Because that way people can help you, and provide services that otherwise you would have to pay for.”
This article was previously published online at www.nextavenue.org.