Modern women avoiding "Younger Wife's Curse”

Ahead of the International Widows’ Day (June 23^rd), Allianz has released a study describing the financial bind many women face when getting married. According to the report, “The Younger Wife’s Curse,” women are on average younger than their husbands and outlive them. In the past, these extra years were more of a curse than a blessing as many women spent them in old-age poverty.  “Social norms are changing, and pensions are improving for women, so today’s younger women appear better positioned to ensure their own financial security. This is a trend that the financial industry will need to respond to in the coming years”, says Brigitte Miksa, Head of International Pensions at Allianz.

According to figures reproduced in “The Younger Wife’s Curse”, older women are at greater risk of poverty in 27 out of 30 OECD countries. Poverty rates are 15% for women and 11% for men. Researchers investigating poverty have shown widowhood is the single most predictive factor concerning a decrease in female income in later years. This is often due to the shorter working lifetime of previous generations of women and dependency on their spouse’s Social Security and private pension benefits, which tend to decrease after his death. In addition, the couple’s assets are often depleted by costs linked to the sickness and death of the spouse making thenewly widowed woman financially poor even if as a married couple they were not.

Against this, another recent report (“2013 Allianz Women, Money, and Power Study”) focused on women’s changing attitudes and behaviors as it pertains to money in the United States. The online study, which surveyed 2213 women ages 25 to 75 with household income of 30,000 US-dollars or higher, found 68% of respondents have become more actively involved in financial planning, retirement and investment decisions since the financial crisis.

“Overall the two studies are complementary and found that women are becoming more and more financially aware, though of course this masks huge differences between countries,” explains Miksa.

Generally women in the developed world today are more educated than their mothers and spend more years in employment. They also enjoy far greater financial independence than their grandmothers and contribute to their own pensions. In addition, they tend to marry later and marry men increasingly closer to their own age. Today’s younger wives, it seems, have a far better chance than their mothers and grandmothers of securing their financial future. Yet, new trends threaten prosperity in later life. Pension reforms implemented in recent years will affect everyone, but men and women are affected in distinctly different ways. An EU report cited in “The Younger Wife’s Cures” notes that these changes weigh particularly to the disadvantage of women.

These new risks could accentuate differences that already exist in terms of retirement benefit outcomes. In addition, the prospect of a longer life can increase the risk that women may outlive their assets."A woman today – married, unmarried or somewhere in between – is still well advised to look out for her own financial security," notes Miksa. “Otherwise, they will be doing themselves a disservice in terms of their long-term future happiness.”

The financial industry is struggling to come to terms with the increasing role women are playing in their own and household finances. The “2013 Allianz Women, Money, and Power Study” found 54% of women still believe the industry is geared towards men. Some 62% of women still don't have a financial advisor and financial professionals placed a distant second to the Internet as a source for financial information.

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