Reclaim Your Finances in the Era of the "Gray Divorce"
The divorce rate of people in their 20s and 30s is falling but baby boomers are divorcing at a surprising rate. In fact, the number of divorces among people age 50 and older has doubled in the last 20 years and those statistics continue to increase. While experts agree it’s largely the by-product of longer life spans, “gray divorce” is sure to affect retirement lifestyles for many people.
Divorcing in your 50s and beyond can be economically shattering for certain groups of people, such as a spouse who has been out of the workforce for decades while raising the children. But the reality is that gray divorce can have a dramatic impact on the finances of everyone involved. Retirement savings that were planned to be shared as a couple will have to fund two separate households, which costs considerably more. In addition, baby boomer finances are impacted more than those who divorce at younger ages because there’s less time to recoup the associated economic losses. That often means either delaying retirement or choosing a more modest retirement lifestyle than originally planned.
With some forethought and planning, there are ways to retain your financial security despite divorce later in life:
- When you hire a divorce lawyer, be sure to hire a financial adviser, too. They can work together on settlement that will be as beneficial to your retirement as possible. You might also consider mediation to facilitate a collaborative divorce. In this situation, couples and their lawyers agree to bargain rather than going to court.
- Decide on a savings approach. Go back to work to increase your savings or scale back on your spending to lessen depletion.
- Start saving immediately. Regardless of your age at the time you divorce, there’s still time to start rebuilding savings and investments. It will take time but it can be done, so it’s important to start working toward that goal right away.
- Make your long term financial security a priority. That may mean cutting back on the financial help you provide for adult children or selling the marital house and downsizing to a place you can comfortably afford. It’s necessary that you make sound monetary decisions and focus on your future.
- Keep an eye on legal fees. These costs can be significant and they are generally paid pre-divorce, reducing the funds on which you will live. If you divorce after retirement, the associated legal fees are nearly impossible to replace.
Divorce at any age means change. Divorcing in your 50s and beyond requires lifestyle adjustments and that often involves scaling back. But with the appropriate preparation, you can enjoy a comfortable, financially secure way of life in your later years.
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