WUNRN
http://womensenews.org/story/retirement/150902/hidden-divorce-penalty-older-age-poverty
USA – High Risk of Poverty for
Divorced Older Women
By Sharon Johnson - WeNews Senior Correspondent - September
3, 2015
Divorced women who deferred
their education to put husbands through school or moved multiple times to
enable their husbands to move up the career ladder are at special risk. So are
those who gave up jobs to raise children.
Credit: Nicholas
Copernicus on Flickr, under Creative Commons
(WOMENSENEWS)--While
economic hardship is steadily worsening for all American seniors, divorced
women over 65 are at especially high risk for ending up in poverty. Divorce
creates financial inequalities that many women never overcome.
A wife's standard of living
decreases by as much as 25 percent in the first year after a divorce while the
husband's rises because courts often overlook the couple's careers when
dividing the marital property, notes Carol Ann Wilson, a certified financial
divorce specialist in Longmont, Colo.
This hurts women, Wilson
said in a phone interview, because the husband's career may be more valuable
than other assets like cars and houses. In addition to higher pay, men's
careers are more likely to provide pensions, stock options, health, life and
disability insurance as well as educational and training opportunities that
boost future earnings.
"Although the number of
working wives has increased during the past three decades, most couples still
invest in the husband's career while the wife's career takes second
place," she says.
Divorced,
Never Married, Widowed
In 2010, about 20 percent of
divorced women over age 65 lived in poverty compared to 18 percent of never
married women and 15 percent of widows. This disparity widened among older
women, found researchers at the Washington-based Urban Institute, a think tank
that does economic and social policy research. About 22 percent of divorced
women age 80 and older were poor compared to 17 percent of never married women
and 15 percent of widows. The researchers did not look at poverty among married
women. Economic studies show that once women wind up older and alone –whether
its widowhood, divorced or never married--they are at high risk for poverty but
divorced women are most affected.
Wives who deferred their
education to put their husbands through school or moved multiple times to
enable their husbands to move up the career ladder often are not compensated
for their sacrifices, Wilson says. Women who gave up their jobs to raise
children can find themselves in dire financial straits because they have no
marketable skills or job prospects.
"As a result, many
divorced women struggle to support themselves and their children," Wilson
says. "Crushing legal bills or debts from the marriage may take decades
for low-income women to repay."
MORE CAREGIVING
RESPONSIBILITIES
Women's caregiving
responsibilities often increase after divorce. About 5-in-6 custodial parents
are women.
"It is difficult for
divorced women to land high-paying jobs that require long hours in the office
and extensive travel because they have to be home to look after children,"
says Wilson. "As a result, they often settle for jobs with flexible hours
that don't pay enough to enable them to build assets for retirement."
Collecting child support is
another challenge. In 2011, the number of custodial moms who received less than
the full amount of child support was over 3 million, exceeding the 2,438,000
who received all they were owed, Census Bureau studies showed.
The average amount of child
support set by state formulae was $3,630, or about $300 a month, compared to
$5,960 or about $500 a month set by legal agreements.
Some
Cushions
Women over 50 who were
married for more than 10 years and have health problems that limit employment
sometimes receive alimony.
Divorced women who have not
remarried and were married for at least 10 years can collect Social Security
benefits based on their ex-spouse's earnings. The woman receives half her
husband's benefits. If the woman had worked, Social Security calculates the
benefits she would receive based on her own earnings. If that amount is higher
than the benefits she would receive as an ex-spouse of a living or deceased
husband, she will receive only her own benefits.
Some states now provide for
equitable distribution of marital property, a concept that recognizes that
marriage is an economic partnership in which each partner makes different but equally
important contributions. Under this concept, the economic contributions of the
homemaker are recognized and taken into consideration in the distribution of
property.
Alimony, meanwhile, is less
common. In the past, when divorce laws awarded property to the person whose
name was on the deed of the house or other asset, men often retained these
assets after divorce. As a result, they were expected to pay alimony. Under
equitable property distribution, however, alimony has lost ground.
In the long run, staying
married or remarrying after divorce translates into greater economic security
for women, notes Kenneth Couch, professor of economics at the University of
Connecticut in Storrs.
A 2011 study analyzed the
economic impact of divorce on about 600 women from the time of their divorces
in the 1970s--when divorced peaked--into their retirement in the 21st century.
The study is included in Lifecycle Events and Their Consequences: Job Loss,
Family Change and Decline in Health, which was co-edited by Couch, and
developed in collaboration with the Social Security Administration.
Economic pressure forced
many divorced women into the job market, Couch told a Federal Reserve Bank of
San Francisco conference on unexpected life cycle events and economic
well-being in 2010. Initially, their personal income skyrocketed because many
of them had worked part time or given up their jobs during marriage to raise
children.
But their retirement assets
were still restrained for a variety of reasons: their jobs paid less than those
of male counterparts, they had less money to put away in retirement funds, they
tended to work at jobs that did not offer pensions and lacked either the time
or funds to pursue more education and enter lucrative paying fields like
investment banking.
REMARRIAGE
Couch found that divorced
women who did not remarry maintained their careers throughout their working
lives.
"They ramped up their
work effort for the rest of their life," he says, "giving them a
large individual Social Security benefit at retirement of about $1,000 a month.
But at retirement, the households of the married women who had earned less
money during their working lives collected about $2,231 in Social Security
benefits because of the extra boost from their spouse's benefit."
Seventy percent of divorced
women in the U.S. remarry. When they do, Couch found, their job status and
personal income again drops, going back to what it would have been if they had
been married all along. But at retirement, they have a similar advantage of
couples who never divorced: The remarried wife's individual Social Security
payment plus her current husband's benefit totaled more than $2,000 monthly.
Trends
in Divorce
About half of all marriages end in divorce; 876,000 divorces occur
each year.
The average length of marriages that end in divorce is eight
years.
Twenty-eight percent of children living with a divorced parent
live in household with incomes below the poverty line.
Source: Census Bureau,
statistics for 2012.
"Being part of a couple
has a positive effect on both emotional and economic well-being during
retirement," says Tatjana Meschede, research director of the Institute on
Assets and Social Policy of the Heller School of Social Policy at Brandeis
University in Waltham, Mass. "In addition to caregiving support during
illnesses, couples are less likely to have their assets depleted because they
share the cost of housing, food, transportation and other essentials."
Sixty percent of senior
single women faced burdensome housing costs in 2008, up 80 percent from 2004,
found a study co-authored by Meschede. (The study did not separate single women
into categories such as divorced or widowed; nor did it compare single women to
married women.)
"Most single senior
women were forced to make daily tradeoffs for paying bills, foregoing home
maintenance or medical needs," Meschede says. "As a result, 45
percent had a zero or negative budget balance after paying their basic needs."
The "Rising Economic Insecurity among Senior Single Women" study, part of the Institute on Assets and Social Policy's "Living Longer on Less" series, showed that even before the 2008 recession--the most severe since the Great Depression of 1929--70 percent of single women lacked sufficient retirement assets. Almost half of single women over age 60 faced the crisis of outliving their financial assets.