Don’t let gray divorce put you in the red

Over the past few years, study after study has shown that more couples in their 50s and 60s are divorcing. And not just a few more: According to a recent report from Bowling Green State University in Ohio, the number of divorces in the 55- to 64-year-old age group doubled from 1990 to 2012; for 65-years-old and up, the number tripled during the same time period.

These are numbers, though. They do not tell the whole story. They do not tell us why, and, perhaps more importantly, they do not tell us what happens after the divorce.

The Bowling Green research suggests that a later-in-life divorce can have serious financial consequences, especially for women. Younger couples have decades to make up lost ground. Older couples may already be retired and on fixed incomes. Their combined resources may provide a comfortable lifestyle. Apart, they may struggle to make ends meet.

While women in their 50s and 60s participated in the workforce, as demographers say, they may not have worked steadily during the course of their marriage. Say a woman took three years off to take care of her young children. Her lifetime earnings will suffer not just because she made no money during that time, but also because she missed three years of (potential) wage increases. Lower lifetime earnings, of course, translate into lower Social Security benefits. In a divorce, then, a woman’s income would be dramatically reduced.

The researchers point out that many women rely on spousal benefits or widow’s benefits to supplement their income. A divorce, however, would take those benefits off the table — something to keep in mind when considering spousal support.

Divorce also comes with the division of marital property. Later in life it is especially important for couples to consider retirement and estate plans during property division negotiations. Among the items to review and, as appropriate, to revise, are:

  • Wills: Do you want your ex to be executor of your estate or to have a claim to any of your assets?
  • Durable power of attorney and advance health care directive: Your ex may not be the best person to look out for your best interests or to manage your finances if you become incapacitated.
  • Insurance and retirement accounts: Is your ex the appropriate beneficiary for life insurance policies or retirement accounts?

One bright spot in the Bowling Green report: Remarriage is not all that common among newly single people in their 50s and 60s, but cohabitation is. That fixed income may not be the only source of support after all.

Sources:

Forbes, “Easing The Financial Impact Of Divorce In Retirement,” Juliette Fairley, Jan. 22, 2016

National Center for Family & Marriage Research, “Marital Biography, Social Security, and Poverty,” I-Fen Lin, Susan L. Brown and Anna M. Hammersmith, November 2015

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