Racial and Ethnic Differences in the Retirement Prospects of Divorced Women in the Baby Boom and Generation X Cohorts

Article excerpt

Blacks, Hispanics, and divorced women have historically experienced double-digit poverty rates in retirement, and divorce and other demographic trends will increase their representation in future retiree populations. For these reasons, we might expect an increase in the proportion of economically vulnerable divorced women in the future. This article uses the Social Security Administration's Modeling Income in the Near Term (version 6) to describe the likely characteristics, work experience, Social Security benefit status, and economic well-being of future divorced women at age 70 by race and ethnicity. Factors associated with higher retirement incomes include having a college degree; having a strong history of labor force attachment; receiving Social Security benefits; and having pensions, retirement accounts, or assets, regardless of race and ethnicity. However, because divorced black and Hispanic women are less likely than divorced white women to have these attributes, income sources, or assets, their projected average retirement incomes are lower than those of divorced white women.

Selected Abbreviations

MINT6 Modeling Income in the Near Term, version 6

PIA primary insurance amount

SIPP Survey of Income and Program Participation

SSA Social Security Administration

SSI Supplemental Security Income

Introduction

Since the 1960s, marriage and divorce patterns have changed in dramatic and well-documented ways. Marriage and remarriage rates have plummeted, divorce rates have soared, and marriage durations have shortened (Ahlburg and De Vita 1992; DaVanzo and Rahman 1993; Goldstein 1999; Kreider and Ellis 2011; NCHS 1991; Norton and Miller 1992; Stevenson and Wolfers 2007; Tejada-Vera and Sutton 2010). These trends have more than tripled the share of women aged 65 or older who are divorced, from 3 percent to 11 percent between 1980 and 2009 (Census Bureau 1995, Table 48; 2011, Table 34). Some researchers project that in the future as many as one in five women will be divorced at retirement age (Butrica and Iams 2000; Butrica and Smith 2012).

The trends in marriage and divorce have not been experienced equally across racial groups. Sweeney and Phillips (2004) find that divorce rates stabilized for white women after the mid-1970s, but they have increased somewhat since the late 1980s for black women. In addition, researchers find that marriage will remain nearly universal for whites and Hispanics but much less so for blacks (Goldstein and Kenney 2001; Harrington Meyer, Wolf, and Himes 2005, 2006; Kreider and Ellis 2011; Norton and Miller 1992; Stevenson and Wolfers 2007). Whites are increasingly more likely than blacks to ever marry. Blacks who do marry are more likely than whites and Hispanics to divorce after the first marriage and are less likely to remarry. Among blacks, 49 percent of first marriages ultimately end in divorce, compared with 41 percent for whites and 34 percent for Hispanics (Kreider and Ellis 2011). Among married individuals in 2009, 71 percent of whites had reached their tenth anniversary, while only 59 percent of blacks had.

These trends will undoubtedly affect the composition and economic well-being of future retiree populations. Historically, older divorced women, blacks, and Hispanics have had significantly lower incomes and higher poverty rates than their counterparts. Among today's women aged 65 or older, 20 percent of those who are divorced are poor, compared with 5 percent of those who are married, 18 percent of those who never married, and 15 percent of widows. Poverty rates of older women also vary dramatically by race and ethnicity: 24 percent of blacks and 22 percent of Hispanics are poor, compared with only 11 percent of whites (SSA 2010, Table 11.1).

One-third of Social Security beneficiaries aged 65 or older depend on their benefits for 90 percent or more of their total income and nearly two-thirds of beneficiaries rely on their benefits for 50 percent or more of their total income (SSA 2010, Table 9. …