Drop in Credit Score is Fallout from Older Partner’s Death – Center for Retirement Research

The negative financial consequences for individuals over age 50 who lose a partner are dramatic.

A new study by Ohio State researchers found that the surviving partners see their credit scores drop by 10 points – a decline that persists for up to two years following the partner’s death. Further confirmation in this study of the financial fallout is the rise in delinquencies on debt payments.

If the late payments involve credit cards, for example, they can expose the fragility of the survivor’s finances. A Federal Reserve study found that nearly half of retirees roll over some or all of their credit card balances to the next month.

Anytime a spouse or partner dies, the survivor’s finances destabilize. The Social Security income coming into married households declines if the number of checks is reduced from two to one. Other research has shown that the newly widowed deplete about 10 percent of their savings within two years to pay living expenses.

COVID only amplified these issues because of the high death rate and the sudden nature of so many deaths, which left many more financial problems unresolved, wills unwritten, and one solution – going back to work – less viable for the spouse or partner. In 2021, COVID widowed more than 1.6 million men and women in the United States.

The Ohio State researchers identified two groups of individuals who were most affected by the death of a partner during the pandemic. First were couples in which both partners had left the labor force when, for example, they retired, were laid off, or stopped work to avoid the virus. Second were couples over age 72, who had the highest death rate from the virus.

The decline in survivors’ credit scores during COVID was in sharp contrast to what was happening in the U.S. population overall. Most adults had increases in their credit scores as a result of Congress suspending mortgage and student loan payments, along with approving the extra unemployment benefits and relief checks.

But the disproportionate impact on retirees over 72 who lost a spouse and are heavily reliant on Social Security checks suggests that the generous package of federal financial assistance didn’t keep many of them afloat in a tough time.

The decline in credit after the death of a partner is “an important yet previously overlooked component of economic security in older age,” the study concluded.

To read this study by Stephanie Moulton, Meta Brown, Donald Haurin and Cäzilia Loibl, see “How Does the Death of a Partner During the COVID-19 Pandemic Affect the Economic Security of Older Adults?”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.