Surviving Divorce Near Retirement
Have you heard the term gray divorce? Gray divorce refers to divorce between people over 50 and it’s on the rise. As we head into this new decade, we see one trend continuing: Baby Boomers are now divorcing at double the rate of the late 20th Century. As life expectancy continues to increase, our attitudes about divorce continue to evolve. And while the incidence of divorce is not increasing as quickly as in the past, Boomer divorce is likely here to stay. So is the sad fact that divorce after age 50 can be financially devastating, especially if you’re close to a planned retirement.
You set aside a comfortable retirement nest egg that anticipated your golden years spent together. Now that same nest egg will have to support not one, but two households. Experts estimate that expenses after divorce are anywhere from 30-50% higher than if you were still together. That comfortable nest egg must now stretch to cover two of many things: two homes, two utility bills, two cell phone plans, two gifts for each of the grandkids. This duplication can eat into your retirement fund at an alarming rate.
More than likely, you’ll face some difficult choices.
- Reduce your standard of living
- Retire later and give yourself time to increase your savings.
You may need to consider selling the marital home and splitting the proceeds so both parties can downsize. That equity can throw off income to live on, so selling may make a lot more sense than one party trying to keep it.
Illness and disability may force more difficult choices. Before divorce, you had some comfort in knowing that if one of you became ill or disabled, your partner would be there to help care for you. After divorce, if you need to hire help, it will hit that nest egg again or the burden could fall on your children.
If you find yourself considering divorce after age 50, the best thing you can do to minimize the financial damage is to be as cooperative with your spouse as possible and not spend a chunk of your nest egg on the divorce process. The more you fight and duplicate efforts the more it will cost. Most importantly, to minimize the financial toll, be sure to hire a divorce financial advisor along with that settlement-oriented attorney or mediator.
About the author:
Bev Banfield is a CPA, Certified Divorce Financial Analyst®, and founder of Banfield Divorce Financial Advisors. The Denver-based company was established to help divorcing couples more easily and equitably separate their finances. Banfield has more than 30 years of experience in financial analysis, budgeting, and auditing. Contact us for more information at (303) 482-1726 or bev@bbdfa.com. Connect with me on LinkedIn https://www.linkedin.com/in/bbanfield/