Social Security and Divorce

Check out this new working paper from the Upjohn Institute for Employment Research on Social Security & Divorce Decisions, by Marcus Dillender.

According to the abstract:

People who have divorced are entitled to Social Security spousal benefits if their marriages lasted at least ten years. This paper uses 1985–1995 Vital Statistics data and the 2008–2011 American Community Surveys to analyze how this rule affects divorce decisions. I find evidence that the ten-year rule results in a small increase in divorces for the general population; however, the effects vary greatly by age. Divorce decisions change very little for people under the age of 35. For people 55 and older, however, divorces increase by approximately 20 percent around the ten-year cutoff, which leads to an increase in the likelihood of being divorced of 11.7 percent at ten years of marriage. For people between the ages of 35 and 55, who account for over half of divorces, the likelihood of being divorced increases by almost 6 percent as marriages cross the ten-year mark. This heterogeneity across ages likely exists because older people are more focused on retirement and have less time to remarry. These results indicate many people delay divorcing because they need Social Security benefits.

The full paper can be downloaded here. Among the author’s conclusions:

Although the paper finds no evidence of an effect on divorce decisions for young people, it finds strong evidence that older couples are affected. Middle-aged couples experience an increase in divorces of 2.8 percent. The effect on older people is more dramatic: Divorces rise by about 20 percent for couples where at least one member is at least 55. The effect on divorce rates appears to be temporary; however, this momentary increase in the flow of divorces has a permanent effect on marriage stocks… For older people, the probability of still being married falls by 2.4 percent as marriages cross the ten-year mark. These large effects for older people likely exist because older people are more focused on retirement and have less time to remarry than younger adults, leading them to wait until their marriages last ten years before they divorce. They also know their earnings histories and can figure out their Social Security benefit from these histories, while younger adults must project their future earnings and are often overly optimistic in this projection.