Patterns Retirement

Gender has differentiated retirement behavior over the twentieth century, although women’s and men’s work histories have become more similar. The household division of labor and women’s limited opportunities for pension acquisition based on their own employment resulted in the past in the prevalent tendencies of women to retire (1) earlier than men or jointly with their husbands; (2) as spouses, survivors (widows), divorced dependents, or welfare recipients (Supplemental Security Income recipients) whose employment histories do not qualify them for worker Social Security benefits; (3) with greater and increasing dependence on Social Security as income over retirement; and (4) at higher risk for poverty after retirement, especially following the death of a spouse and when reaching the oldest age categories.

Employer pensions and Social Security account for 80 percent of median incomes of retirement households (Clark and Quinn). However, the significant majority of retiree households with any employer pension income fall above the median total income of all households. Moreover, less than one-third of women over age sixty-five receive employer pensions, whereas nearly half of men over sixty-five receive pensions; women’s pension benefit levels average about 60 percent of men’s, mirroring preretirement wage ratios (O’Rand and Henretta). One consequence of this distribution of pension income across households and gender groups is women’s greater dependence on social retirement benefits (i.e. Social Security). When husbands with pensions die, their pensions may not continue to support their survivors over the remainder of retirement. About one-third of husbands still do not elect joint-survivor options, which offer them the opportunity to reduce their initial benefits and spread them longer into the future to support their survivors (Smeeding). Accordingly, as widows age, their incomes from private pensions held by their deceased spouses (if they had them) decline.

Extensions of the Social Security Act since 1935 have slowly progressed to meet the needs of older women, beginning with widows in the 1939 extension and finally reaching divorced spouses in marriages that lasted ten years or more in the 1983 amendment. However, the system still places women at risk for poverty with its survivor benefit policies. Women tend to outlive men and survive an average of fifteen years as widows. Social Security benefit rules result in a significant reduction in benefits following the spouse’s death, with women who have retired as workers rather than as dependent spouses often penalized more as widows. While this bias toward traditional male breadwinner couples can be criticized as unfair, the benefit reductions to both groups of widows are nevertheless at odds with women’s well-being, especially as out-of-pocket medical costs increase over the remainder of life and as other sources of income diminish (Smeeding).

Joint retirement. One source of variability in women’s retirement patterns now, and increasingly in the future, is their retirement to their own pensions and Social Security based on longer work careers over the life course. More than half of women between the ages of fifty-five and fifty-nine and nearly 40 percent of women in their early sixties were participating in the labor force by the late 1990s. Projections of future cohort participation patterns at these ages foretell significant increases in these rates (Bianchi). And, currently, women and men are about equally likely to participate in pension plans; approximately half of each group participates. Finally, approximately two-thirds of women currently retire as workers rather than as dependent spouses under Social Security (U.S. Social Security Administration). Accordingly, women’s retirement as dependent spouses is decreasing, although the continuing gender-based wage and pension gaps will slow their retirement income parity with men.

These changes in the economic roles of women suggest that the dynamics of decision-making in retirement may be shifting in a direction that will produce even more heterogeneity in couples’ retirement behaviors. Joint retirement may change from a process in which wives retire ahead of or with their husbands, based on their dependent statuses, to a more complex decision based on balancing independent opportunity sets and common preferences, especially within the context of the changing pension environment described earlier. Research on retirement of worker couples finds strong patterns of synchronization or joint exit among couples retiring between the 1970s and the 1990s (e.g., Henretta et al.; Gustman and Steinmeier; Blau). The studies also show that wives are more responsive to their spouses’ exits. Yet, the most recent patterns reveal that wives’ labor exits are also highly influenced by their own market characteristics, specifically their own earnings, health insurance coverage, and pension eligibility (Honig). The extent to which these characteristics will become more important in the retirement decisions of future cohorts is a matter of conjecture.

Solitary retirement. One final pattern of retirement with gender-related implications is solitary retirement. The growing proportions of never-married and divorced and unremarried persons entering retirement are changing the composition of the retired population. Historically, widowhood has been the predominant solitary status among retirees. However, the Social Security Administration has projected that by 2020 the widowhood rate will decline to 31 percent from 42 percent in 1991; less than half of women over age sixty-two (46 percent) will be married; and nearly one-fifth (19 percent) will be divorced, up from 6 percent in 1991. The likelihood of remarriage among women is lower than among men, and this disparity increases with age. Thus, among women, solitary retirement will include women without spouses and with fewer benefits from marriage, including disposable shared assets and social support. Eligibility for divorced spouse Social Security benefits does not provide adequate support against poverty, and poverty rates in the older population are highest among widowed, divorced, and never-married women (Smeeding).