The Widowhood Effect and the Length of Retirement
The length of retirement is one of the most important assumptions in a financial plan. For married couples, life expectancy calculations typically assume that mortality rates are not related (i.e., independent). This common assumption ignores the well-documented fact that mortality rates typically increase for the surviving spouse after spousal loss, something known as the “widowhood effect.” In other words, a surviving spouse’s life-expectancy declines after the death of a spouse, all else equal.
In some recently published research in the Retirement Management Journal, I explored the existence of the widowhood effect, leveraging data from the Health and Retirement Study (HRS), and the implications of the extent of the observed widowhood effect on retirement projections. In this piece I summarize some of the key findings.