The alone stage of retirement: A risk exacerbated by gender

There is a growing proportion of baby boomer women who will end up living alone at older ages with limited incomes, and for whom health and daily activity issues will become more burdensome. It is this middle stage and into the late stage of retirement that many women will also find themselves alone and having to cope with both financial and non-financial issues – a period referred to as “the alone stage of retirement” (ASR). 

In Challenges Faced by Canadian Women in the Alone Stage of Retirementauthors Douglas Andrews, FCIA, and Lori J. Curtis aim to unpack the challenges among those living in the ASR and present recommendations to improve the conditions and outcomes of Canadians who find themselves in this vulnerable stage.

The gender gap

The literature identifies three stages of retirement: early (ages 65–74), middle (ages 75–84), and late (ages 85-plus). Within these stages, the spending of one’s financial resource needs follows a U-shaped pattern: high in the early stages while seniors are active, lower in the middle stage as retirees enjoy home routines, and higher again in the later stage as health declines and daily living activities become increasingly difficult.

A small caveat, however, is that retirement savings need to be resourced within a stable working life – a privilege, that in the past, many female baby boomers have lacked access and opportunity to.

Female baby boomers are unique in that compared to previous cohorts, it is a group that either divorced or did not marry (Curtis and Rybczynski, 2015). In instances where they did marry, generally, the male was the primary earner, with higher savings and pension income. Interestingly, both scenarios place older widowed and single women at a disproportionate disadvantage. This could be due to a multitude of co-factors but is likely a result of insufficient planning or a miscalculation on how long one’s wealth and other resources might last.

Outcomes of this poor positioning have resulted in the number of women living in poverty substantially outweighing the number of men living in poverty, with up to four times as many women living in poverty depending on the stage of the ASR.

While women on average outlive their male counterparts, making them more likely to live in the ASR, this does not mean older men are exempt. Despite women making up a larger percentage, the poverty rates and gaps do not differ by sex as much as hypothesized. A finding made more troublesome as male life expectancy increases, meaning the number of men in the ASR is on the rise.

The growing and retired poor

Most Canadians are ill-prepared for retirement, underestimating their expected lifetime by almost four years, a finding substantiated in the CIA’s 2020 Retirement Risk Survey.

With advances in health and medicine and the fastest-growing age group in Canada being 90 years and over, projections show the number of centenarians doubling by 2031.

Women outnumber men in the older age groups (over 88% of centenarians are women). However, improvements to men’s life expectancy (3.6 months per year) in Canada is increasing at a faster rate than that of women (2.4 months per year); a factor contributing to the small decrease in the proportion of women in the ASR.

But while this means that some couples might age together longer, it does little to negate the dismal statistic that senior poverty rates are increasing in Canada, particularly for women, and more so for those living alone.

About 216,000 persons aged 65 years and older, or 3.5% of the senior population, lived in poverty in 2018, a stat that saw little change from 2017. The poverty rate was 1.7% for seniors living in families and 7.9% for those unattached. Yet despite these statistics, there has been little focus on the ASR or the late stage of retirement at all.

The solution

One policy approach to reducing poverty among those living in the ASR is to increase the Guaranteed Income Supplement. Analyzing two different levels of additional subsidy, the authors estimated the annual cost of the levels to be approximately $1 billion initially (based on 2015 data). 

“Although the estimate of the impact is not likely to be precise due to data limitations discussed in the report, we believe that such a cost is affordable,” comments Douglas. “This information would go a long way to improving the lives of Canada’s most vulnerable seniors, and we urge governments to act promptly.”

The paper also reviewed housing alternatives in Canada, finding that only those with significant wealth may have the option to live in a facility where they can receive a continuum of care as they age and their needs for care change. Citing examples from the Netherlands of stichtings or from the UK of Whiteley Village, the report also provides guidance on how Canada might develop a more affordable approach to aging in place than currently exists.

The impact of the pandemic on long-term care (LTC) facilities was another consideration factoring heavily into the report’s recommendations. The high numbers of infections and deaths due to COVID-19 among those residing or working in LTC facilities raised a public concern that could no longer be ignored, calling on changes to improve the quality and affordability of LTC.

“To manage higher aggregate costs for LTC there needs to be an increase in public revenues (typically through higher or new taxes), reduced spending in other areas, increased government deficits, or some combination of these approaches,” explains Lori. “Given the magnitude of government deficits incurred in responding to the health and economic needs around COVID-19, we suspect there will be little appetite for greater government deficits once the pandemic is under control. Thus, the policy suggestions we propose are in the areas of increased tax and spending reforms.”

Whether one’s concerns are financial, social, or health-related, the implications of aging alone in retirement can be a daunting prospect – one which the report aims to alleviate. “This paper is an important call to action,” says Douglas. “We hope that by identifying ASR and some of the challenges faced by those living in it that it will increase public awareness and lead to the improved outcomes and conditions of those who find themselves at this vulnerable stage of life.”

Read the full report.

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