Academic journal article Social Security Bulletin

Life-Cycle Aspects of Poverty among Older Women

Academic journal article Social Security Bulletin

Life-Cycle Aspects of Poverty among Older Women

Article excerpt

by Sharmila Choudhury and Michael V. Leonesio*

This article focuses on the relationship between women's economic status earlier in their lives and their poverty status in old age. Previous research on the determinants of poverty among aged women has documented the socioeconomic and demographic correlates of the poor, and has examined the financial impact of adverse later-life events such as widowhood, deterioration of health, and loss of employment. Using data from the National Longitudinal Survey of Mature Women (NLSMW), we find that most women who experience these types of adverse events in their later years do not become poor and that a large majority of older NLSMW respondents who were poor in 1991-92 were poor earlier in their adult lives. Whether women are impoverished by adverse later-life events depends on their economic resources just prior to the event. But, the financial resources available in old age, in turn, depend very much on their long-term economic status throughout much of their adult lives. This article underscores the fact that for most older women, these adverse events do not appear to precipitate poverty spells-at least not within the first couple of years-and directs attention at longer term circumstances that make some women more vulnerable to poverty.

During the past 30 years there has been a substantial improvement in the absolute and relative economic status of the aged population. Radner (1995) documents the large increases in the real (that is, adjusted for inflation) money incomes of the elderly from 1967 to 1992: Inflation-adjusted median pre-tax money income of family units (that is, families and unrelated individuals) with a head aged 65 or older increased 69 percent. The ratio of the median incomes of aged to nonaged family units rose by 35 percent during this time period. Income inequality among aged units fell substantially over this time interval as well. Lower income aged family units experienced large relative gains in real income. Radner reports that mean real income for the lowest income quintile rose by 79 percent over the 25 years, compared with 43 percent for the highest income quintile. These improvements in the economic position of the elderly are reflected in the secular trend in the U.S. Government's official poverty rate for persons aged 65 or older.

Since 1966, the overall poverty rate for the elderly has fallen from 28.5 percent to 11.7 percent in 1994 and has markedly improved relative to the poverty rate of the nonaged adult population (table 1). Reasons for the improvement in the economic status of the aged population are thought to lie primarily with increased Social Security benefits-particularly for the low-income elderly-but also include increased income from private pensions and assets (Radner 1995; Social Security Administration 1996). These statistics confirm the popular view that, indeed, the Nation's elderly have fared well in recent decades.

Despite this overall picture of prosperity among the elderly, the gains that have accrued to the aged in aggregate have not been equally shared by men and women. Older women are twice as likely to be poor as are aged men. Minority women are at an even greater disadvantage. The nature of the problem can be seen more clearly in table 2, which examines 1994 poverty rates for the older population in more detail.

Several features of the pattern of poverty among older women are prominent. Married couples are considerably less likely to be poor than are unmarried individuals. Irrespective of age and race, unmarried men are strikingly worse off than married men. Unmarried older women experience even higher poverty rates than do unmarried older men. Poverty rates for aged blacks and Hispanics are uniformly much higher than for white men and women of similar age and marital status. Controlling for marital status, it is not clear from these statistics that poverty rates increase with age.

Why is the incidence of poverty among aged women disproportionately high? …

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