Expected widowhood duration varies with socio-economic status

ABSTRACT

This article examines the expected duration of widowhood and its variation by socio-economic status (SES). The relationship between widowhood duration (WD) and SES and how they relate to annuitization and longevity risk is relevant in the light of ongoing changes in many pension systems. Using data from Ireland, WD is estimated for older married individuals, as a function of spousal age gap and spousal longevity gap. Both of the gaps are negatively correlated with SES. Thus, WD is negatively correlated with SES. Wives in the bottom of the SES distribution have the highest degree of annuitization, protecting them against longevity risk brought about by a higher WD. The movement towards less automatic annuitization may impact future widows differently, depending on their SES.

KEYWORDS:

• Widowhood
• age gap
• mortality gap
• annuitisation
• longevity risk

JEL CLASSIFICATION:

• D14
• D31
• D84
• J12

Acknowledgments

We thank our colleagues at the HSE and the ESRI, Seán Lyons in particular, as well as Irene Mosca at TILDA and participants at the 2017 SLLS and IWSEA conferences for helpful comments. We are grateful to TILDA for access to the data used in the article. All errors are our own.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ A ‘couple’ refers to two people who are married or in civil partnership. ‘Husband’ and ‘wife’ are used to refer to the two individuals within a couple. In the analysed sample of the population, same-sex couples are rare (n = 2) and are excluded.

² FitzGerald, Byrne, and Znuderl (2012) also estimate life expectancy by social class – a measure similarly available in TILDA. However, a measure of social class is only available for a subset of respondents, meaning that its use would result in a smaller analysis sample.

³ The gap in the remaining life expectancy at age 65.

⁴ See Central Statistics Office (2018) for Irish death rates by age group and gender.

⁵ Remarriage after widowhood is more common among males than females: in the 2011 Census, there was one remarried widower for every eight widowers, and one remarried widow for every 33 widows.

⁶ The mean spousal age gap in new marriages registered in Ireland has decreased from 4 years in 1959 to 2 years in 2014 (Central Statistics Office 2017).

⁷ The gender gap in the remaining life expectancy at age 65 in Ireland has been steadily increasing over the past century, from 0 in 1900 to nearly 4 years in 1990. Since then, the gap has narrowed and the latest estimate stands at 2.9 years in 2011 (Central Statistics Office 2017).

⁸ Studies of the SES differences in life expectancy in the USA have found that life expectancy grows fastest among higher SES groups (Kitagawa and Hauser 1973; Auerbach et al. 2017).

Additional information

Funding

This work was supported by the HSE (Health Service Executive) Ageing Awards:[”Financial Security in the Older Population in Ireland: Assessing the Impact of Austerity and Policy Change” HaPAI/2015/AN]