The timing of falls into poverty after retirement and widowhood

A major concern of workers, even those financially prepared for retirement, is that a small risk of poverty may grow over time. Cross-sectional data showing that older cohorts have higher poverty rates substantiate this concern. Using data from the Retirement History Study, we analyze changes in the hazard of entering poverty as a cohort of elderly couples retire and age and the wives are widowed. The initial fall into poverty among those who were not poor before the husband retired is more closely linked to the event of retirement or widowhood than to the slowly eroding household income over the period of retirement and widowhood. The death of her retired husband puts a wife in economic jeopardy whether this shock occurs one year after his retirement or some years later.