Research Findings

THE FINANCIAL (IN)SECURITY OF WOMEN IN REMARRIAGES (4-part series)

Margorie Engel, Ph.D.*, in STEPFAMILIES, Fall 1998; and Spring, Fall, and Winter, 1999

The voices of women on financial issues in remarriage have been virtually neglected. I am grateful for the candor and detailed information provided by 426 women who are members of the Stepfamily Association of America. As promised in the cover letter attached to the Questionnaire, the results will be reported in the STEPFAMILIES newsletter beginning with this issue.

Many aspects of current family life and demographic trends in marriage, childbearing, divorce, remarriage and redivorce, are adaptation to changed economic conditions and to the demands they put on people. In this study, women seem to embrace the idea of an equal partnership before marriage and make allowances if the marriage functions in a less-than-equal partnership between husbands and wives. That is an extraordinary leap of faith when our laws and policies do not support marital equality in either an ongoing marriage or at the time of divorce.

This report is a look at What Is and not What Ought to Be, and the real and perceived consequences of What Is. Simply put, "What economic security is there in this marriage?" In broad terms, this study tested for wives' actual financial security along with whether, and if so, when, wives felt financially secure.

Her Story

Women and men experience marriage, even the same marriage, in different ways and they receive very different and unequal benefits from marriage. This research study, relying on wives' replies exclusively, will be reporting on the wife's perception of her financial security in her marriage. The husband's perception of his wife's financial security would not necessarily be the same.

Women made a number of changes in their lives when they said, "I do." Almost half moved to a new town, city or state. While one-fourth of the women quit a job, over one-fourth of them began a new job. Respondents sometimes noted hardships around the job change, but none so vehemently as this professional woman with a Ph.D.

"If I could start this marriage over, I would never leave my $60,000+ job, dump my house, roll out (of state), meet the stepchild from hell, and watch this entire marriage go into the toilet as the stepchild smiles with satisfaction."

There was no spousal support for most of the women to give up, and only 18% of the women acquired a house by inheritance or divorce settlement, while 29% of the previously single women owned their own homes. Initially, one-third of the wives moved into their husband's homes, while over half of the couples moved into a home that was new for both spouses within the first couple of married years -- a decision strongly encouraged by many of the respondents when giving advice to women about to remarry.

Half of the wives acknowledge becoming more active in money management. Most of them discuss financial responsibility with their husbands, while over half of them created a joint investment strategy and actually developed a financial plan together. And 40% brought debts from a previous marriage. Husband's debts were a hot topic when wives were asked what they would do if they could start this marriage over again. The general reply went something like, "Watch to see how your future mate handles finances before you marry."

Age, Remarriage, Education and Income

Of the respondent wives, almost all are white and over half of the women are in the 40-54 age bracket. Results indicated that 71% of the wives and 96% of the husbands had been previously married. In a little more than half of the stepfamilies, the couples began their financial partnership by living together before the marriage. One-third of the women remarried within two to four years of a divorce while 39% of the men remarried in less than two years. Thirty-eight percent of the women waited more than four years to remarry.

In this study wives are more highly educated than their husbands and earn significantly less of the family income, Frequencies show that most of the wives have at least some college experience and over half of them are working toward or already hold a graduate degree. At the same time, 68% of the respondents had 1997 personal income levels of less than $50,000, while 30% had personal incomes of less than $25,000.

The education level of wives compares with only four out of five husbands having some college experience and less than half of them working toward or holding a graduate degree.

Notwithstanding the discrepancy in educational status, only 12% of SAA respondent families have a "total household income" of under $50,000.

A CHANGING PERSPECTIVE ABOUT MONEY

The questionnaire included four open-ended questions that allow the wives to use their own words. There appears to be a distinct pattern of responses that provides insights into how wives in remarriages view their financial position.

Women were asked, "As a result of previous financial experiences and answering these questions, do you have a different feeling about money?" Respondent wives focus on debt and communication about money as the primary issues they would assess differently if they could begin the relationship all over again. Discuss, disclose, decide were the words used.

SAA Wives' Report Overall Reactions to Money Issues in their Remarriage

When respondents had an opportunity to write freely, they had a great deal to say about money issues in their stepfamilies. Overall, commentary fell into three basic categories, with the general consensus conveyed by the following pronouncements:

Good

I wouldn't change anything. I think we have done a good job with it. Helps to have some money to work with and to have similar goals and "money sense." We have spent hours and hours on this area of our marriage.

Fair

Because of stepfamily financial needs, you may reach times in the marriage that you feel deprived. The minute you feel deprived, make moves to buy yourself something (maybe less expensive) that you've been wanting. If you don't do this it will build up into resentment over time.

Poor

Money and finances are big stressors in a stepfamily. If I had known he was going to be like this, I would never have married him. I am contemplating divorce.

SAA Wives' Financial Advice to Women About to Remarry

Financial problems are almost exclusively related to ties to the first marriage rather than to a lack of resources:

Knowing that future child support payments are subject to increases resulting from later filings is the single greatest source of financial ambiguity in our marriage.

To sum up respondents' warning advice in three words. "Proceed with caution!" Wives in this study are, by and large, happy in their marriages and with their lives in general. Along with numerous cautionary tales, they offer "softer" thoughts:

• "Don't set things in stone if you can help it. You may be surprised how much your feelings and attitudes may change over time."
  
  
• "Stepfamilies bring a truckload of baggage into a (new) marriage relationship and you need to be strong spiritually to cope with the various issues that are most assuredly unresolved."

And finally,

• "Think! Positively, lovingly and realistically."

SAA STUDY - FINANCIAL SECURITY OF WOMEN (part 2 of 4)
Margorie Engel, Ph.D.*, in STEPFAMILIES, Spring 1999

The SAA study provides rich data on stepfamily money and its' distribution between husband and wife. The results run counter to the social assumption that family money is distributed equally among family members - a reality that sometimes begins prior to the marriage.

Prenuptial Agreements

Financial planning in a second (or subsequent) marriage may start with a prenuptial agreement, but it usually doesn't. Results from this study are no exception. Wives and husbands sign prenuptial agreements at the same rate - 18% - although a number of the agreements are signed by only the husband or only the wife rather than reciprocal agreements signed by both. Prenuptial agreements are typically signed when both partners are in a high income bracket. If only one partner has substantial assets and income, the chances for a prenuptial agreement are slightly higher if that partner is the woman.

Fiscal Control/Consumer-Ability

In this study, the term fiscal control is used to evaluate the second wife's ability to control the money in her daily life. This control-ability, also referred to consumer-ability is measured by whether the wife has selected financial accounts opened and maintained in her own name. Ownership of a car is also included in this category because readily available transportation facilitates consumer behavior.

Distribution of Checking Account Ownership: Checking accounts establish a banking relationship, provide documentation about where money comes from and where it goes, and allows some degree of financial autonomy. A personal checking account makes good economic sense. In each of the families represented in the study, a checking account exists. Forty-four (44)% have only joint accounts, 12% have only separate accounts, and 41 % have some joint/some separate accounts. One respondent commented, "Keep some of your own money separate to maintain some feelings of independence and control. I believe this would alleviate resentment towards payments of child/spousal support."

Distribution of Credit Cards: Bank cards (revolving credit) provide a source of readily available purchasing power. It is important for women to have adequate money to meet current needs and a source of funds for major expenditures or unforeseen financial emergencies. Survey results showed a mixture of some separate/some joint bank cards for 47% of the respondents. Those having only joint accounts and both separate, accounts are approximately 23% each.

Distribution of Automobile Ownership: In this study, 32% of couples have joint ownership of automobiles, while in 31%, both spouses own their own car.

Degree of Financial Security

Financial security is measured by the current availability of liquid assets and ownership/ beneficiary status for wills, life insurance, and trust instruments. Questions addressed asset ownership of a savings account, mutual fund account, stock and bond account, retirement account, primary residence, and other real estate to show how many of the respondents held each of these assets in her own name.

Savings Account Ownership: Over half of these wives have at least one savings account in her own name.

Distribution of Mutual Fund Ownership: Mutual funds are a common form of stock ownership in this study. The most popular methods of ownership are joint accounts and some separate/joint accounts.

Distribution of Retirement Ownership: The combination of being on their own and living longer mean that women need far more retirement income than do most men. For over half of the respondent households, both husband and wife have separate retirement accounts in their own name, 12% have accounts in the husband's name alone, and slightly more have retirement accounts in only the wife's name. About 1 in 10 have no retirement at all.

Distribution of Primary Residence Ownership and Other Real Estate: 20% of the respondents felt they could not stay in their home if their husband dies. In this sample, most couples am home owners. Approximately the same percentage of homes are in either the husband's name only or in the wife's name only. Home ownership is jointly held in 66% of the responses.

Personal Savings and Investment Goals: Respondents ranked their top four investment goals in descending order as retirement providing for children's education, financial independence, and vacation/travel. Of least reported concern to this sample is future medical needs.

Inheritance

Inheritance is the traditional method by which women accumulate assets and, therefore, financial security. In past years, many men simply left their entire estate to their wives. A change in husband and wife relationships (including one or both having children from prior relationships) and changes in the tax code have each affected the timing and method of asset transfers. This leads stepmothers to ask questions about inheritance issues in stepfamilies and look for creative solutions.

Ownership Status of Life Insurance on Husband: Being named the beneficiary on a life insurance policy is not the same as being the owner of the policy. The owner of record has the authority to change the beneficiary and even cancel the policy by conscious decision or by failure to pay the premiums. Without being both the owner and the beneficiary, the beneficiary has no control over how the policy is managed unless a court order exists. In this study only one in five of the wives own the policy on their husband's life and 10% of the wives do not know the status of ownership.

Husband's Life Insurance Used as collateral for Child/Spousal Support: During a divorce settlement, the insurance policies can be a negotiable issue regarding ownership, beneficiaries, and for use as support-payment assurance. In this study, 7% of the respondents indicated that their husband's life insurance is being used as collateral for child/spousal support.

Wife is Beneficiary of Life Insurance on Husband: About 75% of the respondent wives are the named beneficiary on at least one of their husband's Whole Life or Term insurance policies, another 5% do not know their beneficiary status.

Husband Has a Legally Valid Will: Almost three-fourths of the respondents' husbands have a legally valid will - a percentage that corresponds with the number of wives having a will. However, in about 8% of the stepfamilies, the wife does not know if her husband has a legally valid will,

Wife is Beneficiary of Husband's Legally Valid Will: Over one-fourth of respondent wives know that they are not a named beneficiary of their husband's will. Another 10% are not sure of their beneficiary status.

Trust Funds: A small percentage of the respondent couples have trust funds. When the husband has established them, the current wife is not always the named beneficiary.

Are there ways to increase the rates of happiness and success in remarriages by assuring greater financial security for wives? Respondent wives gave the following suggestions:

1. Have wills and other legal documents in order.
2. Create wills, investments, insurance etc. as openly as possible and, in general, tell children of the arrangements.
3. Make sure that wives have beneficiary status in their husbands' wills.
4. Ensure that a wife can remain in her own home after the death of her husband.
5. Be informed.

SAA STUDY - HUSBANDS AND WIVES MANAGING MONEY (third of a four-part series)
Margorie Engel, Ph.D.*, in STEPFAMILIES, Fall, 1999

While we would like to think that fewer women are being taught to believe they won't be good at managing money, the wives in this sample still foresee that a man will take care of it for them. This is exemplified by one response to questions about existing insurance policies and agreements, "My husband handles the insurance and he isn't here for me to get all of this information." Another wife admitted, "I'm very ignorant [about money]."

Even though fewer than two of five husbands were deemed to "always get financial advice" before making decisions, wives in this sample rated their husbands their Number One choice as most useful resource, followed by personal financial planners, newspapers and magazines, a tie between accountants/friends/relatives, and purchased books. Responses to the question "Do money issues cause tension in marriage?" were about equally split between "yes" and "no." While husbands and wives appear to talk with each other about money, less than half of the respondents talk about personal finances with their children.

Over half of the women surveyed were responsible for maintaining the financial files. Over 60% of the wives mostly or somewhat agreed that their financial involvement was greater in this marriage than in prior marriage(s) and identify communication as the key.

The method by which household expenses are paid is a key emotional issue for remarried couples. Many women refer to splitting the cost of running the household and feel a disproportionate burden due to the difference in income between husband and wife. A typical suggestion was to "set up a clear percentage of contribution to household expenses rather than vague commitments."

An earlier study found that remarried women were often secretive about some monies they may have brought into the marriage thinking it necessary to keep some money aside in the eventuality of yet another divorce. This was not replicated in the current study where one in four respondent women reported secretly keeping some money aside. In an early presentation of the survey's results, men in the audience expressed surprise at this finding. They considered it perfectly normal to have a "secret stash" and assume that women consider it typical/acceptable behavior for themselves as well. It seems as if today's cookie jar is empty of secret funds while the cash-filled cigar box of yesteryear is alive and well!

Child Support - Wife's Children

Slightly over half of the wives brought children to this current marriage. Though self-reporting, one fourth of these women pay full or partial child support while only four percent of them do so by court order. Medical coverage and educational expenses are paid by more than half of the women. Over 70% pay for special occasions and other extras. It is surprising that less than half of the women talk about personal finances with their children despite their limited personal financial resources and disproportionately high financial responsibility for the children.

In three-fourths of the cases, husbands were ordered by the court to pay child support. In 60% of those families, the amount is paid in full, with another 7% of non-custodial fathers making partial payments. By the remarried mothers' count, fewer than 20% of these dads pick up the full tab for education, special occasions, and extras. One fourth reportedly paid partial amounts for these expenses for their children. Interestingly, these moms reported that over 75% of the stepfathers contributed financially to their stepchildren. The availability of these contributions is an important factor in the decision to remarry. "Don't enter the relationship if your mate doesn't have the sincere desire to help your children".

Child Support - Husband's Children

93% of the husbands in this study are also fathers, which makes stepmothers of virtually all the respondents. In a little over 13% of the families, the non-custodial ex-wife has a court order to pay child support. These mothers pay the full amount in almost all of these cases and most of them pay on time. By the stepmothers' account, very few of these non-custodial moms pay education expenses while almost one-third pay for part of the expenses associated with special occasions and extras. The resident stepmothers were uniformly similar in their frustration with a legal system that, from their vantage point, appears to relieve non-custodial mothers of adequate financial responsibility.

Husbands have a court order to pay child support in over half of the stepfamilies. Stepmothers report that more than 80% of them pay on time and in full. Most pay educational expenses as well as for special occasions and extras. Additionally, over half of the stepmothers financially contribute to their stepchildren in spite of personal incomes that are substantially smaller than their husbands' incomes.

The financial stress created by children's expenses is a determining factor in the decision to have an "ours" child. This was expressed clearly by a respondent commenting on changes she would make if she could start the marriage over, "I'd not agree to have a child unless my husband agreed that his first financial responsibility is to the youngest children, who will require support for years before they can be independent. [Note: Even with a verbal agreement to that effect, law does not support it.] Wives who did not bring their own children to the marriage were more likely to have misgivings about this marriage. Comments ranged from "Be honest with yourself about how much you are interested/willing to financially support your stepchildren," to "You both need to understand that when you married you also married the children - for better or worse." In the midst of the serious comments about the financial needs of children, levity came in comments like, "If there are stepchildren involved, invest in Tylenol and Zantac!"

When There Are a Lot of Children

In stepfamilies where both partners brought three or more children into the marriage, the emotional issues over "who paid more for what"' seem to all but disappear. The sense of teamwork and "one big happy family" is remarkably strong. An "ours" child typically refers to a biological child of the partners in the new marriage. However, these large families had a sense of "our" children when making reference to each other's children. They wanted to be "fair," though fair was not clearly defined. When couples in these families have financial disputes, they are typically about the definition of fair distribution among the children.

When the Stepmother Does Not Have Biological Children

Wives who are not also biological mothers do not seem to have a frame of reference for child-related expenses, feel an additional strain when dad provides monies above and beyond what is legally required, and are surprised by the lack of accountability for the use of child support. In addition, they want appreciation for their personal contributions. Some of the wives have accepted the financial situation with resignation, "Know that you are accepting financial responsibility as well as parental responsibility and resign yourself to that fact before your marriage."

When the Stepmother Has Biological Children

Wives who bring children to the marriage seem to have a pragmatic view of child support expenses. For the most part, biological mothers [who are stepmothers] promote timely and in-full payments for their stepchildren. "Don't complain about the child support. He owes the money to his child and should feel good about supporting him/her."

Insurance

Most medical insurance in this sample was obtained through employers. Less than 10% of medical insurance comes from other sources, but almost 5% of the respondent families have no medical insurance at all.

About half of the wives have disability insurance primarily through an employer plan. A surprisingly low 60% of the husbands are covered by a disability policy again mostly through an employer plan. The loss of a regular income from the husbands in these families would appear to create a significant financial hardship.

SAA STUDY - EFFECTS OF PREVIOUS MARITAL STATUS ON FINANCIAL SECURITY
Margorie Engel. Ph.D.*, in STEPFAMILIES, Winter, 1999 (last of four articles)

It is reasonable to expect that women who have been through a financial upheaval such as divorce, will take measures to protect their personal consumer ability and availability of liquid assets. While women have no direct control over their beneficiary status, it is reasonable to expect that issues such as wills and life insurance will be important topics of conversation in stepfamilies.

When coded by previous marital status, there was no statistically valid difference in current financial security. Previously married women and those in their first marriage report virtually identical financial (in)security positions. Of course, some individuals are more financially secure, and financially independent than others, but neither group of women as a whole is in secure financial shape.

A first reaction may be, "They didn't learn!" Upon further reflection, "Maybe they did learn - and they see the darkness." Seeing laws, policies, and accepted social practice stacked against them, did these, women want economic validity but trade it off for male companionship, co-parenting, "safe sex," social approval, and some sharing of family-life responsibilities, along with short-term and legally conditional financial security? Did previously divorced women go into another marriage with hope and trust while accepting smoke and mirrors? Is this the problem that is invisible - continued financial dependence? Are women's options, as they say in chess, zugzwang - in which one is forced to make an undesirable or disadvantageous move and lose either way?

Perhaps education is not a primary component of the solution. Maybe the financial education programs aimed at women are doing more to "stir the pot" than to effect any meaningful positive change in a woman's personal financial security. To know and understand something is not the same thing as being in a position to do anything about it. Indeed, this "cornered" position as opposed to the "victim" position that wives find themselves in may play a major role in the current money tension between spouses.

Effect of Marriage Length on Financial Security

When marital assets responses are coded by length of marriage there are significant correlations:

• The percentage of only-joint checking accounts rises from 17% in the first year of marriage to a high of 53% in marriages between 5-9 years before falling to less than half after 10 years. Couples have more separate and joint accounts during the first year of marriage and by year 10 seem to settle into a combination of either joint accounts or separate and joint accounts in about equal percentages.
  
  
• Respondents have no only-joint mutual fund accounts in marriages of less than 1 year but by year 10, one-third of the couples have only-joint accounts. Most of the changes in ownership occur between the 5th and 10th year of marriage.
  
  
• The way stock and bond accounts are held changes dramatically over the course of the marriage. Within the first year there are no only-joint accounts and all other forms of ownership have similar percentages. Most changes occur between the 5th and 10th year of marriage.
  
  
• Regarding bank credit cards, there is virtually no change in the ownership method of choice - having both separate and joint accounts. The percentage of only-joint accounts rises steadily throughout the first 10 years of marriage.
  
  
• The ownership of the primary residence has a perfect correlation with length of marriage. Joint ownership rises steadily from 1 in 5 within the first year of marriage to over 4 in 5 by year 10. The largest jump occurs between the 1st and 4th year of marriage.
  
  
• The pattern of automobile ownership also appeared to have a perfect correlation with length of marriage. There is a steady rise in joint ownership from zero in marriages of less than 1 year to almost half by year 10. The big lump from none to 25% comes in years 1-4. There is a significant drop in both having separate ownership from a high of 54% in year 1 to a low of 21% after 10 years.

This segment looks at retirement funds and the beneficiary status of women during the first 10 years of marriage. In their concerns about retirement, respondents feel most vulnerable - worry most about not saving for retirement between the first and ninth year of marriage. It appears the concern may be coupled with a flurry of activity to put satisfactory retirement plans into place because by the tenth year the concern about retirement funds drops off.

Another area of perceived risk dropping off in later years of the marriage is the category of "husband's former family are beneficiaries." Perhaps this is because many of the dependent stepchildren have reached the age of majority. At this point dads are free to make another choice for their designated beneficiary - specifically the new wife.

Both husbands and wives steadily increase their percentages for having a legally valid will throughout the first 10 years of marriage - from half to over 85%. This information tells us nothing about the possibility that the wife knows a will exists and is not pleased with its directives. The frequency with which wives are the beneficiary of their husband's will does move with meaningful percentages and numbers. While less than half of the wives are named as beneficiaries within the first year of marriage, by the tenth year 83% are so-named. As might be expected, by the 10th year the percentage of wives who do not know their beneficiary status has dropped by two-thirds.

Financial Reality for Women

Responding to questions about an emotion-laden topic - money and its distribution - raises the issue of psychological risk to the wives. The (SAA) questionnaire brought forth a subconscious awareness of the seriousness of the financial problems in remarriages. Some of the respondents say it is spurring them to action by initiating in-depth financial discussions with their husbands and developing formal inheritance plans. Above all else, it is clear that most of these women in remarriages don't know there's a list of things they should know and do for their personal financial health. For educators, therapists, lawyers and faith-based service providers, elected officials, policy makers and the financial industry there is much work to be done. The taboo about money and financial partnerships is creating a low rumble that is steadily and surely undermining our stepfamilies.

* Margorie Engel, Ph.D. is president of SAA, and an author and consultant.