Remember ME - You Me and Dementia

Friday, March 28, 2008

How Older Women Can Shield Themselves From Poverty

Elderly women are highly vulnerable to poverty. On average, they are likely to live 13 or 14 years longer than their male partners. And they are more likely than men to run out of resources in late life.

Divorced or separated older women are the most vulnerable, because they have lower incomes and fewer resources. It's a group that will grow in size as the baby boomers age and as more women divorce or separate, said Timothy Smeeding in a presentation and webcast interview at the Population Reference Bureau on Feb. 28, 2008. Smeeding is director of the Center for Policy Research and distinguished professor of economics and public administration at the Maxwell School at Syracuse University, and studies the social and economic vulnerability of older women in developed countries.

The income and asset poverty rate varies by marital status among elderly women. In the United States, the share of elderly women living in poverty is highest among divorced or separated women (37 percent), followed by widowed women (28 percent), never-married women (22 percent), and married women (10 percent).

The elderly women that Smeeding studied were ages 65 and older and lived either alone or with a spouse or partner. Those living in poverty were surviving on less than half of the national median income (income poverty) and had liquid assets of less than one-fourth the national median income (asset poverty). These income and wealth measures included such factors as pensions, public transfers such as social insurance or public assistance, earnings, capital income, and real estate.

The United States has more of these poor than any other country and is more likely to have larger shares of divorced and separated older women who are poor than other countries, Smeeding noted. In Sweden, for example, nearly 4 percent of divorced/separated elderly women fall into the same category (see figure). In Germany, 22 percent of divorced/separated women are as poor.

It's possible that in northern and western European countries, the public sector acts as a buffer against poverty, Smeeding said. With a safety net under everyone's income, divorce doesn't make as much of an economic difference. In the United States, it does. American divorced women often get less than one-half of the pension and other assets of their former husbands.

Divorced Women Are Especially Vulnerable

Divorced women are especially vulnerable, because divorce can cut them off from their ex-husband’s assets unless they get a favorable legal settlement. A woman who either took time off to raise the kids or never entered the labor force could find herself with neither assets nor job skills needed to keep her out of poverty.

In a divorce, the house is always a bone of contention, Smeeding says. Besides being the biggest middle class asset, it's been a good investment over the last 20 years. At the end of life, a divorced or separated woman who owns her own residence would be better off than those who rent. She could use the home as a hedge against long-term care risks. For example, one might trade the house in for assisted living arrangements or take out a second mortgage and use that to fund some home care.

How can women who might face divorce when they are older protect themselves from poverty? Smeeding has some advice. For starters, he recommends women find a good job that pays a decent salary with good health and pension benefits. Says Smeeding: "Insure yourself somehow. The best way is to have a career and a job."

As women approach retirement, they should also set their sights on owning a home, says Smeeding. The reason? Women with homes fare much better over the long term than those without one. If a woman gets divorced, she should try to bargain for the home. If she doesn't own her home, home ownership should be a long-term goal. And, as women financially plan for the future, they should take into account the fact that they are likely to live longer than the national averages, which include men. Therefore, they will need more savings and assets to support them through longer lives.

By Sandra Yin


Forget yourself for others, and others will never forget you.

No comments: