Gray Divorce: How Divorcing Later In Life Can Affect Your Retirement Plans

April 2, 2019

Over the past quarter-century, as the divorce rate among couples 25 to 39 years old decreased 21%, the rate of divorce among adults 50 and older—often referred to as “gray divorce”—rose 109%, according to Pew Research. (Divorce among couples ages 40 to 49 rose 14%.)

 

There are a lot of theories about what fuels this trend: empty-nest syndrome, changing priorities, growing apart (or boredom), the financial independence of women as compared to previous generations. The availability of healthcare to spouses who have been on her or his partner’s policy also makes divorce a more viable option today than in the past.

 

In this excellent article from Forbes, Kelly Frawley and Emily Pollock write that whatever the reason couples choose to split later in life, she or he need to be aware of some special challenges that may require them to reimagine her or his retirement plans.

 

A closing pool of assets. When couples divorce in her or his 20s, 30s or early 40s, one or both of them typically have plenty of earning potential ahead. But when 50- or 60-somethings divorce, the asset pool is closing or may have already closed with retirement. Figuring out how to divide assets that won’t be growing between two households can be a challenge. On the other hand, there are often more assets to divide at this later stage of life, so perhaps this obstacle is easily surmountable to some separating partners.

 

Costs of living separately. It’s smart to not only know what assets the couple have but also understand what life costs. The price tag on health insurance alone can be daunting; add home and living expenses to the equation, and sticker shock can take a toll. What should be factored into each individual’s costs? Mortgage or rent, management and operational costs for the home, personal expenses, insurance, vehicle expenses and any other costs associated with maintaining one’s established lifestyle.

 

Custody and other issues related to your children. One of the more attractive features of gray divorce is that it rarely involves custody agreements (often the most complex part of divorce), since the children have usually reached adulthood. In cases where custody is involved, deciding with which parent the child(ren) will live is a bit easier because there is typically a longer history for the court to review of who has been the primary caregiver.

 

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