Spousal Social Security Claiming Decisions and the Financial Shock of Widowhood

Widowhood is a major financial shock for older women, raising the risk of poverty and increasing the incidence of means-tested government assistance. I revisit and update this finding using staggered difference-in-differences methods. I also document that the financial shock of widowhood is attenuated for women whose husbands delayed claiming Social Security benefits. There are two possible mechanisms behind this result. First, under survivor benefit rules, primary earners (usually husbands) pass on the actuarial adjustments from delayed claiming to their surviving spouses (usually wives). Second, couples with greater financial resources and knowledge may be more likely to both delay Social Security and avoid the worst post-widowhood outcomes. I find women whose husbands delayed claiming to full retirement age face a post-widowhood increase of 15.6 percentage points in the probability of falling below the 5th percentile of the pre-widowhood living standards distribution. This effect is around 6.3 percent smaller for each year of delayed claiming by the husband, with the effect concentrated 5-8 years post-widowhood.