Health = Wealth in Retirement?

A high percentage of American seniors die having few or no financial assets and depending on Social Security for their income. Of those with few assets, a high percentage of those are single and don’t live as long. These are the conclusions from a new study published by professors from MIT, Dartmouth, and Harvard. The study used data from a long-term study that follows people in great detail through their retirement years, beginning in 1993.

The new study found that about 46% of American seniors have less than $10,000 of financial assets at their deaths. On the other hand, continuously married people had on average over $600,000 in assets the year before they died.  Also, those with more assets and who were married tended to live longer than others.

What’s unanswered in the study is the extent to which having more wealth leads to better health and marital status and to what extent the reverse is true.

You can read a summary of the study here, which has a link to the full study.

The three pathways tend to produce very different financial outcomes for the elderly. Married couples, for one thing, are better able to mitigate the financial burdens of old age. Among retirees in the study, 52 percent who were single had annual incomes of less than $20,000 and less than $10,000 in other financial assets; by contrast, just 36 percent of single people who started out in two-person households at retirement fell below those levels, and only 26 percent of people in two-person households fit that description.

“There really is a key distinction between what it looks like for the married [couples] and the singles,” says Poterba, who is also the current president of the National Bureau of Economic Research (NBER).