Evelyn Jacks: Why young women need to know about money

Turns out, mom was right. Taking time to choose the right mate has huge benefits, not the least of which are financial. Statistics Canada research tells us that women who have enduring relationships are much better off in old age than divorced and even widowed women. Its June study should be required reading in all high schools.

In "Impact of widowhood and divorce on income replacement among seniors, 1983 to 2007î StatsCan looked at Canadians who became widowed or divorced later in life and remained so. Using data from its Longitudinal Administrative Databank, StatsCan compared the family income of married people at ages 54 to 56 with the family income of always married, widowed, or divorced or separated people at age 78 to 80. These comparisons took into account changes in family size.

The first thing to note: for men, separation and divorce had little effect on income maintenance in old age. Widowhood, in fact, increased their financial resources, largely because they no longer shared family income.

But for married women, the story was different. Here's what we learned:

• If you remained married at age 78 to 80, statistically you had a median family income that was 83% of your family income at age 54 to 56.
• If you became a widow after the age of 55, your income at age 78 to 80 was 79% of earlier income.
• But if you became divorced or separated in your senior years, you had only 73% of the family income you had in your mid-50s. That is 10 percentage points less than the woman who was still married and living with her husband at the age of 78 to 80.

The impact is felt even more among women who married wealthy men with lots of pension and investment income. Amongst the 20% of women at the top of the family-income distribution range, those in their mid-50s had the best income security 25 years later if they remained married; they lived on 74% of the income they had in their mid-50s.

But if they got divorced, their median family income dropped to 53% of what it was. If they outlived their husbands, the replacement income ratio was 65%. Presumably, however, if you were in the top 20% of income, that 65% represented more income than someone in the lower income ranges. The issue for these women is access to their husbands' pension and investment assets after the relationships have ended. Seeking professional assistance before that event and planning for tax-efficient transfers is probably a good idea.

As for those at the bottom of the income scale, widowhood and divorce didn't have a negative effect. Thanks to Canada's public pension system, low-income women all had higher incomes in their late 70s than they did in their mid-50s.

It's Your Money. Your Life. This could change, of course, as women's participation in the workplace continues to evolve. But it doesn't alter the lesson. Couples who stay together and share their pensions and investments are financially better off. You cannot always anticipate divorce or loss of a spouse, but you should always be prepared. Shore up your own pensions and investments so, if you are alone at 79 to 80, you can have the kind of retirement you anticipated while together with your spouse. And be prepared to look after yourself in case of disability.