What are the Impacts of Late-Life Widowhood or Divorce on Income Replacement Rates?
Economic Insights Series, No. 10, June 2012
5 Pages Posted: 27 Jun 2012
Date Written: June 20, 2012
This article in the Economic Insights series examines the income replacement rates achieved in old age by Canadians who experienced marital dissolution, through either widowhood or divorce, after age 55. It is based on results published in the research paper Income Replacement Rates Among Canadian Seniors: The Effect of Widowhood and Divorce.
There has long been concern regarding the financial security of seniors as they age, particularly among those experiencing marital dissolution in later life. It is often hypothesized that older individuals, particularly women, who experience marital dissolution are more likely to face financial challenges than those who remain married. Do late-life changes in marital status have an impact on the financial well-being of older Canadians? And are women more likely to be affected by such changes?
Although financial well-being can have many dimensions, this paper focuses on the income replacement rates of a cohort of individuals aged 54 to 56 in 1983 to examine such a notion. The replacement rate can be defined as the extent to which family income during the working years-here, income at age 54 to 56-is being replaced by other sources of income when people reach a certain age-in this case, when the cohort reached age 78 to 80 (24 years later).
Keywords: replacement rate, income security, widowhood, divorce
JEL Classification: J1, J2
Suggested Citation: Suggested Citation