Divorce after 50 requires careful financial planning
Baby boomers have been divorcing at unprecedented rates over the past several years, according to a recent report, and the trend is still going strong. Often referred to as “gray divorce,” the upswing in baby boomer divorce has drawn attention to the unique financial issues that can arise when married couples part ways later in life.
“Gray divorce” rising
As reported by USA Today, the divorce rate among people age 50 and older has doubled in the last two decades, with one in four 2010 divorces involving a couple in that age group. While baby boomers are often spared some of the contentious issues that can plague younger couples during divorce, such as child custody and visitation, older spouses must face their own set of unique challenges during divorce. For many, the biggest concern when divorcing after 50 is how the divorce will affect their finances during retirement.
Couples who split up later in life often experience a reduced standard of living as a result of having to use their shared resource to support two households instead of just one. According to some estimates, this factor alone can increase expenses by as much as 30 to 50 percent.
Because older spouses typically have fewer remaining working years in which to make up for any financial losses resulting from divorce, a breakup can have a dramatic impact on their lifestyles and retirement plans. To cope with these issues, some divorced individuals may delay retirement, save more aggressively, or cut back on travel and luxuries to help cope with the change in financial circumstances.
Another way to help minimize the negative financial consequences of divorce after 50 is to negotiate a divorce settlement agreement that thoroughly accounts for the long-term needs of each spouse. A well-crafted settlement agreement is especially important during a divorce in which one spouse has been financially dependent on the other throughout the marriage, such as when one spouse has left the workforce to raise children. In these situations, the less wealthy spouse may often have very little in the way of independent financial resources, and in some cases may be financially devastated by the unexpected loss of retirement resources.
Health care is another potential roadblock for older couples during divorce, especially when one spouse is dependent on the other for health insurance. When one partner has a serious health concern, such as Alzheimer’s or cancer, this issue becomes even more important. Because insurance companies typically do not allow spouses to remain on one another’s insurance policies after divorce, many couples choose to include the cost of health care in their divorce settlement or alimony agreement. In some cases, when the cost of maintaining separate health insurance policies is too high, it may be necessary to consider other options, such as separating from one another without divorce.
Contact an attorney
People considering divorce after middle age are encouraged to consult with an experienced divorce lawyer in their area for a thorough discussion of their specific circumstances and the various legal considerations involved. A knowledgeable attorney can help divorcing spouses understand their options and will advocate on their behalf for a settlement that meets their needs.