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Marriage and economic well being at older ages

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Abstract

This paper provides new evidence on the wealth advantage of marriage. We analyze the relationship between a lifetime of marital status changes and wealth levels near retirement age. We consider type of change whether from divorce, widowing, remarriage, number and timing of changes, and duration in marriage. We document that lifetime marriage experiences of individuals nearing retirement are very diverse: only about one-half of all individuals experience one continuous marriage throughout their lives. We model the impact of marriage on wealth independent of lifetime earnings, mortality risk, risk aversion and other important confounding factors. Consideration of financial, housing, and public and private pension wealth reveal that unadjusted wealth differences between married, remarried and not married individuals are large; as duration of marriage increases, so does wealth; and lifetime earnings as well as future claims on public and private pensions explain most of the wealth differences by marital status for men but less so for women.

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Notes

  1. A substantial literature offers various ways that marriage may impact male earnings. Marriage could motivate men to work harder (Becker 1981), marriage might allow men to specialize in market work (Korenman and Neumark 1991), employers could favor married men over unmarried men (Hill 1979), or men may marry women who contribute in the most important areas of their jobs (Grossbard-Shechtman 1986).

  2. Related but not directly comparable is McNamara et al. (2003). They examine the level of wealth by whether women take early Social Security benefits. They examine marital history but focus on the distribution of resources across pension and non-pension wealth.

  3. RAND HRS is a longitudinal data set based on the HRS data and developed at RAND with funding from the National Institute on Aging and the Social Security Administration.

  4. A respondent who is cohabitating reports individual wealth in the same way as an unmarried person. The implication of cohabitation for wealth was the topic of a recent study by Vespa and Painter (2011). They find that the relationship between cohabitation and wealth depends greatly on an individual’s history of cohabitation (for example on the number of times and duration). They also find that cohabitors who marry adopt financial behaviors that match married couples only after they marry. This type of distinction is not possible with our small sample of coresiding individuals and while extremely interesting, is beyond the scope of this analysis.

  5. The study focuses on marriage events in the present and past, and thus we treat “separated” as married as this is not a recorded event in marriage history. Moreover, legally separated individuals are considered married, the wealth they report in the survey is household wealth, and assets would not yet be legally divided.

  6. See Haider and Solon (2000) for a discussion of characteristics of individuals with and without matched Social Security records.

  7. In 1996, 92 % of non-self-employed wage and salary workers were covered by Social Security (http://www.ssa.gov).

  8. See http://www.ssa.gov for the relationship between years of marriage and benefits. We examined mean Social Security income of women age 62 and over and found married women had only 10 % more Social Security income than unmarried women; in contrast they had 62 % more expected Social Security wealth than not married women. Thus, it is likely the case that the expected Social Security wealth of unmarried women (divorced or widowed) is higher than we estimate owing to uncounted spousal benefits.

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Authors and Affiliations

  1. University of Southern California, 3335 S Figueroa St. Unit A, Los Angeles, CA, 90089, USA

    Julie M. Zissimopoulos

  2. University of California Los Angeles, 1285 Franz Hall Box 951563, Los Angeles, CA, 90095, USA

    Benjamin R. Karney

  3. Auburn University, 206E Spidle Hall, Auburn, AL, 36849, USA

    Amy J. Rauer

Authors
  1. Julie M. Zissimopoulos
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  2. Benjamin R. Karney
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  3. Amy J. Rauer
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Correspondence to Julie M. Zissimopoulos.

Appendix

Appendix

See Tables 11 and 12.

Table 11 Models of total wealth
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Table 12 Frequency of model covariates by marital categories: (a) males (percent distribution), (b) females (percent distribution)
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Zissimopoulos, J.M., Karney, B.R. & Rauer, A.J. Marriage and economic well being at older ages. Rev Econ Household 13, 1–35 (2015). https://doi.org/10.1007/s11150-013-9205-x

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