Unmarried Women No Longer Pay a Financial Penalty in Retirement

What You Need to Know

Younger boomers who have spent most of their adult lives single are catching up to their married counterparts.

On the retirement front, a new study has some good news for unmarried women: They’re no longer falling behind their married peers. Still, it’s tough to celebrate equality when it seems to be driven mostly by the falling fortunes of men.

Studies about how prepared U.S. workers overall are for retirement tend to be incredibly depressing — and even more so when they focus on women, who say in staggering percentages that they’re worried about running out of money. Much of this has to do with women earning less, taking more time out of the workforce and living longer than men.

The retirement prospects for women who are single or divorced have long been even more dire because married couples who pool their resources are often wealthier. But a recent report by economists at the Center for Retirement Research at Boston College shows that for middle-class baby boomer women, staying single no longer carries the financial penalty it once did.

Younger boomers who have spent most of their adult lives single (either because they remained single, got married later, or divorced) are catching up to their married counterparts.

What’s driving this? It’s twofold. First, when compared with older women, more young boomer women received college degrees and joined the paid workforce. In turn, they’re earning more money. That’s the good news.

Gender Wage Gap

But there’s bad news, too: A big part of the reason they’re catching up isn’t just that they’re doing better.

It’s that married men are doing worse. “The large decline in median wealth for women who spend their lives mostly married largely reflects declining fortunes for their husbands,” the researchers said in a blog post.

Remember, the gender wage gap has been shrinking not only because women’s wages have grown but also because men’s earnings have stagnated.

The key metric in the Boston College report is the income replacement rate, which shows whether someone can maintain the same standard of living in retirement. It looks at how much of a woman’s pre-retirement income would be covered in retirement if she effectively annuitized her wealth (from sources such as financial assets or future Social Security or pension plan benefits).

For the Silent Generation women who preceded the baby boomers and have been married most of their adult lives, the income replacement rate was 44% when they were 59 to 60 compared with 36% for those who had been mostly single.