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Wives Not Doing the Retirement Math?

Women give up more money than men

Older woman and man on beach

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Women can be sacrificing financially if they retire at the same time as their husbands.

When it comes to deciding when to retire, wives choose love over money — no matter what the costs.

That’s the implication of a new study out of Harvard Medical School that estimates how much married women in the workforce sacrifice financially by retiring when their husband does, and how little weight they give to money in making that decision.

“Couples do like to retire together,” says Nicole Maestas, an associate professor of health care policy and the author of the study. “This suggests that men don’t give up a lot, but women give up a lot more.”

One of the key elements behind this unequal sacrifice, Maestas says, is that married women may be experiencing their peak earnings years just as they retire, while their husbands may have already passed their peak earnings years.

Those married women may have taken time out of the workforce earlier in their lives. They also are two to three years younger than their husbands, on average, so by leaving the workforce simultaneously with their spouses, the women are retiring at a younger age than the men. 

As a result, Maestas said, wives end up losing more in Social Security benefits by retiring when their husbands do. Social Security retirement benefits, she explains, are determined primarily by average earnings over a 35-year period. Wives are more likely than their husbands to benefit from staying in the workforce, since each additional year they work is more likely to offset a year of zero earnings earlier in their Social Security work record.

The potential financial sacrifice varies by age, Maestas has found. The older cohorts in the study (women born between 1936 and 1947) gave up less than the better-educated and higher-earning boomers in the study (those born between 1948 and 1958).

But the amount of money lost by retiring early seems to have no effect on the decision. For example, among women with the least to gain by working to age 70 — $1,315 yearly in Social Security wealth, on average — 49 percent retired early. But among women with the most to gain — an average of $36,654 yearly — choices weren’t much different: 46 percent retired early.

Maestas says it’s unclear whether wives are making the financial sacrifice of retiring alongside their husband because they value that joint leisure time or because they don’t realize the amount of money they’re giving up.

But she suspects people may not be aware of the magnitude of the wealth that they’re losing. “There’s more to do to get the word out about it,” she says.

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