There is no good time in life for a divorce, but late life divorces have a larger impact, especially on those who were otherwise prepared for retirement.
With divorce rates from adults aged 50+ doubling from 1990 to 2010, the face of retirement is changing. Out of every four divorces today, one or more participants is over age 50. The data through 2014 shows that the rates have remained the same in subsequent years, according to a study from Bowling Green State University. This may be seen as a result of a generation that is willing to take a big risk.
ABC News’ article, “Keeping Some Green in Gray Divorce,” says the reasons for the rise include longer lifespans, more women in the workforce, changing notions about marriage and higher rates of remarriage, which boost your odds of splitting.
Here are some things to consider when divorce suddenly becomes part of your retirement plan. The issues involved in a "gray divorce" are much like those of a divorce at any age, but things like limited working years ahead, complicated assets and adult children may make the process much tougher.
Be sure you have a team of professionals to guide you through the process. This should include an attorney, mediator, financial planner, accountant and a therapist. In a gray divorce, a financial expert is important because you have a lifetime of assets built up. Retirement finances are critical and complex and you should seek the advice of professionals.
A big issue with an older couple is who gets to keep the family house. You should be receptive to alternatives that will leave you in a better position. Selling a home or choosing other assets in the settlement may give you the income you’ll need in the future. Plus, downsizing can significantly help manage your expenses.
The biggest challenge for individuals going through a gray divorce is making certain that there's enough money to provide a comfortable retirement. Consider and reexamine your options based on the settlement. You might need to delay retirement, return to work, downsize or make other adjustments.
One factor often overlooked in retirement planning: healthcare costs. For couples who had been married for ten years or more, remember that you may qualify to receive spousal Social Security benefits. This may help soften the financial blow of a gray divorce.
Be sure to update your will, estate documents, beneficiary designations and other key documents after a divorce. If you want to take care of your ex’s retirement, that is generous and kind, but make sure this happens deliberately and is not the result of an oversight.
Reference: ABC News (September 7, 2016) “Keeping Some Green in Gray Divorce”