December 2, 2003 -- Researchers at the University
of Utah say that despite significant changes in the workplace
to give women pay equity eligibility for retirement benefits,
widowed women are more likely to be poor, compared to the rest
of the continuously married population.
Besides lower income levels for women, the focus of much national
research, one reason for this may be because of increased expenditures
close to the death, including the increased cost of health care
needs, funeral and burial costs. Cathleen D. Zick, professor,
and Jessie X. Fan, associate professor, are some of the first
researchers to study whether expenditures just before death were
a contributing factor to post-widowhood poverty.
“The expenditures are probably one small part of the shift
in economic well-being,” notes Zick, adding that they didn’t
study the emotional aspects of the economic changes. “Expenditures
aren’t the only reason, but they are a contributing
Fan explains that they focused on expenditure flows six to 12
months before women were widowed and then compared them to a “continuously
married” control group.
Zick, chair of the Department of Family and Consumer Studies,
further explains that there was not much difference in health
care expenditures between the Medicare-eligible widows and their
continuously married, Medicare-eligible counterparts. “Those
who experienced the biggest problems were those whose spouses
were ineligible for Medicare prior to their deaths. These households
spent the most on health care prior to the death and because they
were typically younger than 65, and thus ineligible for Medicare,”
says Zick. “Because the study did not have data on health
care expenditures beyond one year, our estimates are conservative.”
Zick and Fan used 19 years of data from the Consumer Expenditure
(CE) Surveys as well as data from the 1996, 1997 and 1998 Medical
Expenditure Panel Surveys (MEPS). Some of their results are forthcoming
in papers that will be published in The Journal of Consumer
Affairs and Social Science Research. Their key findings include:
· Total annual expenditures are, on average, $4,606 higher
for couples where a spouse is soon-to-be-deceased compared to
otherwise similar healthy couples.
· Households where a spouse dies at some point (during
the research period) spend $3,389 more on funerals and burial
services in a six-month period around the death time than did
otherwise similar households where no spouse death takes place.
· Households where a spouse dies spend about $573 less
on food at home than otherwise similar households where no death
· About-to-be widowed couples spend an average of $87 more
per month out-of-pocket on health care than do otherwise similar
· Households where the to-be-deceased spouse is ineligible
for Medicare spend an average of $169 more per month out-of-pocket
on health care than do otherwise similar healthy couples who are
not eligible for Medicare.
· The additional overall expenditures made by about-to-be
widowed households may exceed their available income and contribute
to the increased risk of poverty experienced by widows.
Zick notes that the best financial planning advice is to pre-plan,
or set aside money for funeral and burial expenses. “Setting
aside money in an account or including a portion of savings in
a life insurance policy is an excellent strategy. Make sure your
family knows what you want in terms of a funeral and burial, because
in crises or moments of grief they may spend more.”
Zick and Fan report that in the United States current social security
death benefits, available to all social security benefits-eligible
participants, are $250. Yet, according to the National Funeral
Directors Association, in 2001, the average price of a funeral
in the United States was $6,130, excluding the cost of
a burial plot and burial charges. An online American Association
of Retired Persons (AARP) report states that as of 1999 funeral
and burial costs can often exceed $10,000.
Zick warns, “Prepaying funerals can sometimes be problematic.
The funeral company can go out of business before you die and
the prepaid packages could change. In many cases, prepaying the
funeral is like giving the funeral company an interest-free loan
for 20 years.
“As a society we talk about saving for down payments on
houses, cars and a college education. One of the other areas we
should plan for is the expense of burying a loved one,”