The divorce rate in America climbed significantly in latter half of the 20th century. There were many reasons for this, including a greater percentage of women feeling economically secure (by working outside the home) and waning social and religious stigma associated with divorce.
Since the early 1990s, the divorce rate in America has actually been declining, with one notable exception. Between 1990 and 2010, the divorce rate doubled among individuals 50 and older. This is significant not for moral or sociological reasons but for economic ones. Divorcing later in life can make it far more difficult to afford retirement.
The results of a recent study from Bowling Green State University show that gray divorcees are more likely to be impoverished than peers who are either married or who divorced earlier in life. The study also showed that women are more likely to be financially harmed by gray divorce than men. The poverty rates for women and men after gray divorce were 27 percent and 11 percent, respectively.
The reasons for financial hardships after a late-life divorce are fairly intuitive. Getting divorced usually reduces household income while increasing household costs. Moreover, couples who divorce closer to retirement age have fewer years left in the workforce, meaning that they have a more difficult time replenishing their retirement savings.
If you are over 50 and are contemplating divorce, you should know that poverty is not a foregone conclusion. There are several things you and your spouse can do to lessen the financial impact of a gray divorce. These include:
- Finishing divorce proceedings as quickly and amicably as possible to avoid burdensome legal costs
- Taking the time to understand which of your spouse’s retirement benefits you may be entitled to, including joint savings accounts, IRAs, 401(k)s and Social Security
- Working with an attorney who understands your goals and retirement needs and will strongly advocate on your behalf
Life brings both challenges and opportunities at every age. While gray divorce is certainly not “ideal,” it may nonetheless be necessary. And if you are smart about how you get divorced later in life, you may be able to maintain financial health as you near retirement age.