Married couples are facing increasingly difficult decisions about retirement. It used to be that older couples faced only one retirement decision — the husband’s. Now, with the huge influx of women into the paid workforce over the past 30 years, “retirement transitions of married couples have been transformed,” according to a recent report from Statistics Canada.

Researchers Grant Schellenberg and Yuri Ostrovsky point out that, increasingly, couples must make two decisions rather than just one. They have to balance the preferences and constraints of partners who both make substantial contributions to household income, the researchers say.

As well, categorizing the retirement patterns of married couples as simply wife first, husband first or joint retirement would miss some important new trends, the StatsCan report notes. The proportion of husbands and wives retiring two to four years after their spouse has been declining, while the proportion retiring five or more years after their spouse has been increasing.

The StatsCan report notes that although many couples might prefer to retire together — partly because retirement is more enjoyable if it can be shared with a spouse — the feasibility of joint retirement may well be constrained by things such as age differences between the spouses, health conditions, pension eligibility, job losses and career aspirations.

The StatsCan study looked at some of these factors to see how they are influencing the retirement decisions of married couples. A key finding: while a good proportion of married couples still retire together, the most common pattern — found in 43% of married couples — was for women to retire after their husbands.

Between 1986 and 2001, for example, the proportion of dual-earner couples in which both partners retired within two years of each other declined by 2%. But over the same period, the proportion of wives retiring five or more years after their husbands increased by 7%, while the proportion of husbands retiring five or more years after their wives increased by 4%. Overall, the report concludes, spousal retirement is becoming “increasingly disjointed.”

Perhaps not surprising, the study found the likelihood of spouses retiring together is greater among older than younger couples. For instance, if the husband in a dual-earner couple is 65, his or his wife’s retirement is likely to be accompanied — or closely followed — by the other’s retirement, the report’s researchers conclude.

In contrast, Schellenberg and Ostrovskynote note, if the husband is 55, his or his wife’s retirement is less likely to be accompanied by the other spouse’s retirement. The other spouse is more likely to continue working, they say.

The age difference between the spouses also makes a difference. According to the report: “A wife who is much younger than her husband is more likely to continue working after he retires than a wife who is about the same age or older than her husband.”

The retirement patterns of couples in common-law relationships were not significantly different from those who were legally married, the researchers note. They also point out that, over the past 30 years, the most noticeable change in the marital status of Canadians approaching retirement has been in the increase in the number of older people who are separated or divorced and the decline in the percentage of those who are widowed.

For those individuals approaching retirement without a spouse, the reason is now more likely to be divorce or separation than widowhood or never having been married. However, the Schellenberg/ Ostrovsky StatsCan study was limited to married couples.

Initially, individuals were identified as retired when their annual earnings declined to zero following at least three consecutive years of earning $2,000 or more. Once identified as retired, earnings were not tracked in subsequent years to see if they became positive again — such as might happen if the individual came out of retirement.

However, individuals were also identified as retired when their annual earnings dropped to less than 10% of their average during the three years prior to retirement. The report’s researchers say this definition did allow for the possibility of some limited involvement in paid employment after the initial retirement.

The study found that retirement decisions of married couples are also influenced by the earnings and pension plan membership of the spouses. And the report confirms the findings of other studies, that higher-income couples are more likely to retire together. Schellenberg and Ostrovsky also note that husbands and wives earning $45,000 a year or more were much less likely to continue working five or more years after their spouse’s retirement.

@page_break@They also say the wife’s contribution to a couple’s total earnings prior to retirement is also correlated with spousal retirement patterns. The researchers suggest wives who contribute a larger share of income shoulder greater responsibility for the financial well-being of the household, so they may have a greater incentive to continue working. However, the data the StatsCan researchers used for the study did not provide information for them to test this hypothesis.

Whether husbands and wives in dual-earner couples made pension contributions prior to retirement also plays a big role in the couple’s retirement decisions, the study found. For instance, wives who made pension contributions were significantly more likely than those not contributing to a pension plan to continue working after their husband’s retirement and significantly less likely to retire first, the StatsCan researchers say.

According to the StatsCan report: “Events en route to retirement may also influence spousal transitions.”

For instance, if one spouse loses a job, it may force premature retirement and reduce the prospects for joint retirement by the couple. In the model the researchers used to test the various possibilities, they included a variable to indicate if either spouse had received Employment Insurance benefits in the year prior to retirement,

They found husbands and wives receiving such benefits were far more likely to retire before their spouse than those who did not receive the benefits. For example, the predicted probability of a wife retiring five or more years after her husband increased by 11.1% if he received EI benefits before retiring.

One interpretation, the researchers say, is that when one spouse enters retirement via unemployment, the other continues working to shore up the couple’s financial resources. In fact, the researchers say, in families in which there are no working-age children, the earnings of a wife increased following the laying off of a husband, offsetting approximately 22% of the husband’s earnings losses.

As the baby-boomer generation gets closer to retirement, there has been growing discussion about how older workers might be encouraged to stay on the job. Even though much of the discussion has focused on retirement incentives and constraints imposed by public programs, pension rules and workplace policies, researchers Schellenberg and Ostrovsky emphasize spousal factors are another consideration that needs to be taken into account.

They point out that an increasing number of older workers now take the plans and preferences of their partner into account when making their own retirement decisions. Depending on how the decision goes, the impact on labour supply could be either positive or negative.

For instance, as husbands are generally two to three years older than wives, a preference to retire jointly could be achieved if wives left the labour force a few years earlier than they would have left otherwise, or if husbands worked a few additional years.

But the report concludes that the increasingly independent way in which spouses in dual-earner couples appear to be retiring could mitigate the potential impact of spousal considerations. IE